Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: E. Davies who wrote (25438)	7/11/1999 10:23:00 PM
From: David E. Taylor	Read Replies (2) \| Respond to of 41369

Eric: The arguments I keep reading such as "AOL wants a free ride on AT&T's cable system", "AOL wants the rewards without the risks" etc. seem to me to miss the main point of this "open access" issue. AOL is a content provider. They have clearly made the decision that owning, building, or upgrading the cable infrastructure is not going to be part of their future business, otherwise they'd have been buying stakes in cable companies themselves. OTOH, AT&T has clearly decided that owning, building and upgrading the cable infrastructure and tying it in to their existing high capacity long distance network is a key to their future business. That future business includes (finally) local phone service, as well as high speed internet access, and presumably other bundled goodies such as consumer video phone service, etc., etc. Given these different business goals, why would AOL want to "partner" with AT&T? And why with ATHM, a competing ISP and content provider? AT&T is going to own a big chunk of the high capacity long distance and local distribution networks. All AOL wants to do is to use that distribution network for its content, paying a reasonable price to AT&T for that use, in the same way that AOL will pay a reasonable price to Bell Atlantic, US West, et al for ADSL service and to Hughes for satellite service. The price paid to AT&T presumably would include whatever return on its cable investments AT&T can reasonably get in a competitive environment. There's nothing free for AOL in that kind of arrangement, and AT&T's "risk" (if there is any) is rewarded by the revenue it can generate from its cable assets, whether that revenue comes from ATHM, AOL, or some other ISP. IMO, there's fundamentally no difference between that kind of business arrangement for content supply and distribution and the well established supply, long distance and local distribution of other services such as natural gas, water, electricity, etc. David T.