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To: E. Davies who wrote (7695)	4/11/1999 4:24:00 PM
From: Frank A. Coluccio	Respond to of 29970

OT - OT Warning! This post reflects a directionless stream of consciousness, while waiting for my family to step out to dinner... Eric, this discussion gets more fascinating as it progresses. What are we talking about? Shifting eyeballs? Loops? Cable Drops? Higher speeds? Choice? E-commerce potential? Telephony services? Portal functions (whatever those are)? Actually, what we're talking about here, on the surface, anyway, is the combined costs and revenues to be attained through the sale of ISP accounts and last mile plant-derived services. Beyond this superficial calculus lies the real meat going forward, as e-commerce and other forms of services portend the greater bounty. This is a strange kind of fruit stand we're all standing around, where apples do not always equal apples, much less oranges. Many AOL subscribers already have second telephone lines to support auxiliary [fax, business] and Internet access related activities. Some have third lines. If you combine the cost of approximately $22 per month for the second line [leaving the 3rd line alone], plus usage, to the cost of ~ $20 for AOL, these surfers wind up with a $42+ price tag for the pleasure. If you examine the subscription rate of ~$20 alone, though, how much of that goes to AOL? They have central office and Internet related overhead to contend with, plus their usual business overhead. After the telco splits and the 'net settlements, and amortization on their port boxes and routers, they may walk away with ?? Does anyone here have an idea of what this amount is? Let's just say AOL's split is ~ $10 <??>. One of the immediate results of their going to a cable venue is that the ILEC suffers a loss of some ~ (22 + y), y being the cost of AOL's colocation and connection fees to the telco. Say y equals $5, making $27 the amount the telco potentially forfeits in total, if AOL skips, from those subscribers who already have a second line for Internet access. Now, suppose that AOL were to hop onto ATHM's sponsor's facilities. Telco is immediately out $27, and AOL would hope to achieve a sustained $20 monthly fee uninterrupted from its subscribers. What part of that should go to the cable operator, given the fact that the subscriber is already paying for cable access? And what part to ATHM? What's left over for AOL? What part should be left over for AOL? Consider that many of the cable operators costs are already sunk, albeit into a shared-topology medium. And they are already being paid a subscription fee by the subscriber! Or, if one wanted to get really bold about this subject, AOL could turn around and demand that the MSO pays them for the privilege of carrying their content! Don't laugh. Don't cable operators in some instances pay programmers for their content? It has to do with what is more valuable, the message or the medium. Only time will tell. Say, at some point, AOL's (or any other yet to be disclosed provider's, for that matter) participation becomes near-mandatory for some forms of information and services. Voice telephony, educational, safety, it matters little what. And that provider (e.g., AOL) has exclusive rights to those attractions. Could happen. In order to offset such a bold move by AOL, the MSO could limit AOL's penetration onto the MSOs' cable networks by filtering them out at the router port level. Now we're really talking about the gloves coming off. Anyone have any thoughts along these lines? When will it all turn to all-out war? Can this come to signal the demise of egalitarianism on what used to be called the open Internet? The dinner bell is sounding...

To: E. Davies who wrote (7695)	4/11/1999 6:57:00 PM
From: Robert Scott	Respond to of 29970

AOL does not want users to have to pay for @Home's content if they don't want it - ie separate the transport from the content. This presumably would mean a lower price for the transport only model. T has said, pay us $40, we'll give you transport, ISP and our @Home site and services. If you want to bypass @Home content you can - like changing Home Page. AOL does not trust T here and believes that cable internet access should be treated like ADSL where you can buy transport only and pick your ISP & content. I would suggest you read AOL's comment at the FCC site if you're really interested.