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Strike up the broadband | page 1, 2
People typically hate the idea of paying more than one company each month for their Internet service (that's one reason subscription-based pricing for Net content has had such trouble -- consumers feel that they've already given at the office of their ISP). So if in the future you are paying a cable provider (AT&T or whomever) each month to connect you to the Net, you are unlikely to want to send a check to AOL as well. Now, of course AOL could sign a deal with AT&T -- in fact, one is rumored -- in which AOL provides the content and services, AT&T provides the connectivity, and the two companies find a way to split the monthly check. Everyone's happy. Except there's one hitch for AOL: That "open access" banner it has waved so avidly this year would fly back into the company's face. To AOL, "open access" has so far meant "open up your cable networks, AT&T/Excite@Home, and let us in!" But if AOL closes a deal with AT&T, open access will suddenly mean something very different: The principle would require AT&T to give AOL's rivals the opportunity to deliver their services over AT&T's pipes, too. And -- here's the rub -- most of those rivals (like the most formidable, Yahoo) don't charge users a cent. So they can give consumers or AT&T (or both) a better, or certainly cheaper, deal than AOL can. Scott Rosenberg's column appears once a week in Technology Now, it's not at all clear that open access is a legally enforceable concept in this area. But AOL has been its loudest proponent to date, and the company would look ridiculous if it signed a treaty with AT&T and then turned around and denied open access to its competitors. Furthermore, those competitors' services are already accessible from any Internet connection -- you can use Yahoo from any AOL account today. AOL doesn't care about any of this as long as it collects its monthly tax from you. But what if the new world of cable modem service undermines that revenue? The dirty little secret of AOL's success is simple: It's not the quality of content or service but the ease of installation that has allowed AOL to prosper. AOL's introductory disks are idiot-proof, and its service remains the single easiest way for neophytes to connect to the Net. Today, high-speed Internet service -- whether based on cable modems or telephone companies' DSL lines -- is still pretty complicated to set up: Technicians typically have to visit your home. But it won't always be that way. And as soon as someone invents a high-speed Net connection with a no-brainer installation process like AOL's, AOL is in big trouble. To be sure, AOL could invent that easy on-ramp itself. Then, if it could also wean itself from its dependence on revenue from monthly fees (as it once kicked its hourly-fee habit), it could continue to extend its roster of millions of users. But whether it adapts this way or not, the company is plainly entering a new era in which its old formulas will no longer serve it. If it tries to remain an ISP, it will lose ground to the higher-speed competition; if it gives up its ISP role, it will lose its privileged relationship with its customers' credit-card accounts. In other words, whether AOL wins the open-access war in court or at the deal-making table, its world will never be quite the same. As for Excite@Home, it now looks fairly unlikely that the company will survive in its present form -- which means that its attempt to emulate the AOL model is also headed down the tubes. However the broadband future evolves, it looks like there's still hope we can keep some kind of division between ownership of Internet content and control of online distribution -- in other words, to prevent, as it were, the publishers from owning the newsstands, or the telephone companies from owning all the 800 number services. I don't know about you, but I'm kind of relieved. AOL's captive-audience model has been successful for the company, but it's not my idea of the ideal arrangement for the customer, who winds up barraged with pop-up advertisements. How would you feel about paying a telephone provider who expected you to listen to ads before making a new call? Anyone with such ill manners doesn't deserve to know my credit card number.
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