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Strike up the broadband
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Oct. 5, 1999 |
The Web is a logon-free zone; most Web sites know nothing about you other than what you choose to tell them (and you could tell them anything). But there is somebody in the online business who does know exactly who you are, where you live and what your credit card number is: your Internet service provider, or ISP. And in an industry where information about users is considered money in the bank, that kind of relationship is priceless -- thus the rise of a new "free ISP" industry, which offers consumers free Net connections in exchange for even more detailed marketing data. Mostly, the Internet has evolved with a healthy division of labor and responsibility between companies that provide content, information and services (like Yahoo, Amazon or Salon) and companies that provide raw connectivity (the Baby Bells, EarthLink/Mindspring, your local mom-and-pop ISP). There's only one major exception to this rule -- America Online. In evolving from a proprietary dial-up service to the mother of all ISPs, AOL cultivated its business of aggregating content and commerce while expanding its role as the world's largest provider of online access. That put it in the catbird seat of Internet marketing. Scott Rosenberg's column appears once a week in Technology I'm taking the time to review this with you because it's essential background if you're going to make any sense of the hurricane of rumors that has recently engulfed the Web industry: Excite@Home, the story went, was going to split apart, selling its "content" business (chiefly the Excite Web portal) to AOL and leaving @Home's cable-modem distribution "pipes" in the hands of Excite@Home owner AT&T. The rumors blew across the markets all last week before subsiding in a cloud of official press releases packed with non-denial denials and a cancelled Excite@Home board meeting Monday. Didn't Excite and @Home just announce their merger in January, to analysts' cheers? Isn't the company engaged in a high-profile regulatory battle with AOL, which is demanding that @Home be required to allow AOL customers to connect to the Net via the "pipes" of @Home's many cable-company partners? What on earth is going on? Excite@Home was the first company in a long time -- at least since Microsoft tried and failed to turn its Microsoft Network into a media empire -- to challenge AOL by co-opting its strategy of tying together distribution and content. @Home planned to pull off the same coup that AOL once did, but using speedy cable modems instead of poky telephone dial-up connections. Now it seems that AT&T -- which, when it acquired cable giant TCI, also acquired a controlling interest in @Home -- has had second thoughts about this strategy. AT&T, of course, is the original "all-pipes" company, and apparently it has little stomach for the thorny world of new media -- or the kind of trench warfare it might have to engage in to fend off AOL's "open access" attack. So if the rumors prove correct, and AT&T engineers a breakup of Excite@Home and a detente with America Online, it means that AOL has won a bloodless victory and secured its future in the "broadband" world of high-speed cable modems and DSL lines. Right? Not necessarily. Indeed, it could be the beginning of the end for the cozy AOL universe.
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