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To: Bill Harmond who wrote (97534)	3/27/2000 11:34:00 AM
From: Sam Citron	Read Replies (1) \| Respond to of 164687

>>That's not it. It's portal based. Don't most portals generate a substantial portion of revenues through longer-term deals with specific partners? Remember AOL's deal with Tel-Save that had Tel-Save paying AOL $100 million as an advance on future commissions, along with a % of profits and warrants to buy shares? This let Tel-Save avoid costly advertising battles against AT&T and MCI and also save by billing its AOL customers online. In effect this said that Tel-Save is AOL's preferred retail telephony partner. You can get this special deal from Tel-Save only on AOL. I had suggested in my previous post that a possible "carrier as gatekeeper" wireless strategy might end up with Sprint only allowing you to wirelessly order a burger from McD and ATT only allowing you to order from BK. Let me now modify this scenario: Assume that the list price of a Big Mac and a Whopper are both $2. Sprint wireless users will be offered the ability to order a Big Mac from a cell phone for $1.50 while ATT wireless users will be offered the ability to order a wireless Whopper anytime for $1.50. The charge for the burger will naturally appear on your telephone bill.<G> This will result in faster lines since you wont have to wait for the cashier to accept payment and make change. At 11:30AM your AT&T cell phone rings with an automated message asking if you are getting hungry and informing you that if you press the pound key you can order a Whopper for only 99 cents that has been cooked exactly the way you like with your preferred condiments and will be ready and waiting for you at exactly your preferred time. Think this is far-fetched, William? Suppose you are a Sprint customer who happens to strongly favor Whoppers over Big Macs? All I am saying is that the open network model will win out in the long-run because it allows greater consumer choice and engenders more direct competition. Open networks will always win out against closed networks. Network economics always favor open networks because they can offer new deals instantly without going through additional layers of centralized overhead each time a new service is added. AT&T should be indifferent toward whether a customer wants to order a Big Mac, a Whopper, a Wendy's, or a tuna on rye. It should care about offering consumers the ability to connect with as many merchants as possible on its wireless network for this is the essence of what makes one network more valuable than another. Whether it charges a 1% transaction fee and if so, who pays, the consumer or the merchant, are issues that are easy to work out. But it should be obvious that everyone benefits with a more open system. It is much more profitable for the carrier to cede the gatekeeper role and just let the market have what it wants. Sam