Backtalk: AOLs Fight

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Plenty of folks in the cable business are getting tired ofAOL's nonstop lobbying to force operators to open their networks to unaffiliatedproviders.

But get used to it: It doesn't look like AOL is goingto give up the ghost here, because it can't.

So far, AOL has been stymied in its tracks. The FederalCommunications Commission refused to make cable operators open their networks to ISPs.

So last week, AOL, U S West and MCI officially formed the"OpenNet Coalition," with the goal of getting a law passed that would banexclusive contracts between cable operators and ISPs in which they have financialinterests.

The coalition has vowed to take its case to the Hill,intent primarily on breaking up the cable industry's relationship with At Home Corp.and Road Runner.

For all of the grandstanding last week by the newcoalition, Decker Anstrom, president of the National Cable Television Association, saysthere's really nothing new here.

"This is the AOL coalition that urged the FCC toimpose common-carrier regulation on cable's new high-speed facilities and services.The AOL coalition's scheme would surely slow broadband deployment, as leaders fromSilicon Valley and the investment community recently demonstrated to the FCC," hesaid.

Yet this AOL-led coalition presses on, and it's notsurprising why: It has to if it wants to remain a player.

Even though AOL is currently the market leader -- with 15million Internet customers and a market capitalization of $76.7 billion -- you have toremember that the company did not start out that way, and that it could quickly loseshare, given the meteoric changes in the Internet marketplace.

In other words, today's highflyers are tomorrow'sdown-and-outs -- like Prodigy, once a promising early proprietary online, dial-up servicethat watched AOL eat its lunch.

Over the years, AOL had made many right moves, consideringthat it, too, started as a proprietary online dial-up service. Its growth was meteoric andconstant. It had the early edge, up and running well before the Internet became themass-market product that it is today, now accessible via zillions of narrowband ISPs andalso available through ISDN lines, T-1 lines, cable modems and ADSL technology.

Remember, AOL started as an online service, and its mostpopular features were e-mail and chat rooms. AOL grew steadily as more and more contentproviders flocked to its doors. Some AOL executives to this day will privately tell youthat customers don't want speed -- they want all of the great content that AOL hasamassed.

But AOL's content is nothing compared to what isavailable on the Internet free-of-charge. And AOL really skyrocketed when it, too, offeredaccess to the Internet -- the place where everyone really wants to be.

That phenomenon was only several years ago. And it was onlya few years ago that ISPs hatched all over the nation, providing customers with nothingmore than down-and-dirty access to the Internet at a good price.

That's when the landscape shifted for AOL. Computermagazines back then began predicting the death of traditional online services like AOL,CompuServe (which AOL now owns) and Prodigy.

In hindsight, it sure looks like they were right aboutProdigy -- the then-brainchild of Sears and IBM, which was sold to an internationalconcern and is now a shell of its former self.

And that's why AOL wants to play in the high-speedfast lanes, and rightfully so, because many of its customers will want that kind ofenhanced service eventually, if not now.

While some people might think that AOL's recentactions at the FCC are disingenuous -- asking for regulation of its competitors, buteschewing government intervention in its own business -- AOL has to press on.

And AOL is making some interesting moves on other fronts.Just last month, it announced an agreement with Bell Atlantic Corp, making thattelco's ADSL technology available to AOL subscribers in its Northeast andmid-Atlantic territory.

That has the potential of being a smart move -- a truepartnership, rather than the antagonistic approach that it is currently taking with thecable industry.