To: RocketMan who wrote (15356 ) 5/6/1999 9:50:00 PM From: Islander99 Read Replies (1) | Respond to of 41369
Will this be the answer to AOL's broadband challenge? Apologies in advance for a long post. There has been much discussion about how AOL "loses" in the AT&T/MediaOne transaction. I see this from a different perspective. I access AOL about 5 or 6 times a day. From work, I access via my broadband T-1 connection. From home, I access via my nifty @Home connection. I never access AOL by modem dial-up. AOL is in no way restricted to broadband customers. It is accessible via industry standard TCP/IP connections. If some cable company got the idea in the future that it would limit the TCP/IP protocol in some way (in order to keep its customers from accessing AOL), its customers would revolt. If the concern is, instead, that because consumers are paying more for @Home's wider "phone line," they will stop paying for community or content services, I don't see it as much of a threat, for this reason: AOL has 17,000,000 customers today (for its main product, and millions more for its subsidiary products like ICQ messaging and Netcenter, and Compuserve and on and on). @Home has 450,000 customers. @Home (and its masters AT&T/TCI, Cox, Comcast) want to grow fast enough to justify the extraordinary capital expense of two-way broadband. They cannot wait 10 years out, because technology is going to pass it by. (See today's announcement by Lockheed/TRW and multiply that by a dozen or more visionary ventures in the next five years.) @Home has no choice but to do a deal with AOL. Think package pricing. Think two-for-one. Think cross-promotion. Think businesses acting rationally to improve shareholder value by working together when it makes sense to work together. Ahh, you say, but @Home will create its own content, thereby obviating the need for an AOL account? Anything is possible, I say, but @Home sure hasn't done that up to this point. (Well, I suppose they could become a good content provider, but if they did, they would be the first technology company that did.) @Home is a distribution channel, not a content provider. What's more, it is a distribution channel operated by multichannel operators that have succeeded by carving out monopolistic franchise areas that are the antithesis of the open Internet. As long as AOL sticks to its knitting and builds or buys compelling content and interactive services that are responsive to the needs of the market, it will continue to be the valuable property that it has become. --Islander99