Connection Dethrones Former King: Content

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Once upon a time, when the Internet was great, developers proclaimed that content was king — particularly when accessed via broadband.

The lords of broadband Internet access posited that it was crucial to create their own flashy, multimedia video and branded entertainment content, if they wanted to attract subscribers and reap profits.

But when hard times hit, that expensive and often demanding king fell victim to an economic palace coup — deposed by a market shift that emphasized broadband's "always-on" connection, tools and applications.

As a result, content has been relegated to a minor courtier, as cable and digital subscriber line service providers take a far more modest approach to their online portals.

PORTALS, TAKE TWO

That trend is evident in a sort of changing of the guard for cable-modem services.

While Time Warner Cable's in-house Road Runner service has soldiered on with a home-grown, video and broadband-rich content portal, a crop of "second-generation" cable modem services scrambling to fill the void left by bankrupt Excite@Home Corp. have traveled a much different route.

Several former affiliate cable operators have opted to simply hand it over to the experts — the ISP portals that already are mainstays in the narrowband world. Count AT&T Broadband and Charter Communications Inc. in that number.

AT&T Broadband uses portal service provided by AT&T WorldNet, and has no intention to change that arrangement in the near future.

"Obviously we don't do content here," said Broadband director of external communications Sarah Eder. "We provide a service and we are very good at managing our networks.

"We're not experts in the content areas and we prefer to partner with the content providers and the partners that are experts in that."

Similarly, Charter is in the process of handing over all of its content portal services to Microsoft Corp.'s MSN, under a deal announced last fall.

The full portal service — set to debut soon — will feature MSN content, with an area for Charter to hawk new services.

That decision is far from just a cable phenomenon. Digital-subscriber-line providers Qwest Communications International Inc. and SBC Communications Inc. have largely outsourced their content to Microsoft's MSN and Yahoo! Inc., respectively.

The fact that content owners still keep the gates partially closed to Web distribution plays a part in the outsourcing trend, according to Joe Laszlo, a broadband analyst for Jupiter Media Metrix.

"I think that at this point of the market, it really is a difficult thing for a SBC or a Qwest, or even someone like a Comcast [Corp.], to really know who they should be partnering with for content," said Laszlo. "Who do you turn to? It's much easier thing to decide to team up with a portal and offer very limited content on your own, trusting a portal partner to be able to aggregate richer content for you."

ASTOUNDING TACK

Even more striking is the new path taken by Astound Broadband, the competitive cable provider run by Xcel Energy Inc. subsidiary Seren Innovations Inc.

Though the provider's Astound.net Web site provides information on products, customer care and technical support, it no longer offers a preset a start page for its Internet users. That represents a major change in philosophy for Astound, which once did have an online content-development unit.

"Astound has no plans for providing exclusive broadband content," said Greg Sanderson, product manger for Astound Broadband's Internet offerings. "We see ourselves as a pipe. We are a pipe into somebody's home, so what we want to do is enable all the things that are possible by providing a high-quality pipe."

Focusing on the connection, rather than the content, is definitely the trend among broadband providers, Laszlo said.

"It seems like the broadband industry as a whole has glommed onto connectivity related value-added services, like the home network and the personal firewall and virus protection," he said. "That sort of mundane utility application that is what we are seeing as the focus for this year, in terms of, 'What can we upsell our customers to?'"

MODESTY: BEST POLICY

There are still providers that have created their own broadband portals, but none sport the flash and dazzle of the early broadband days. In fact, most look virtually identical to narrowband outlets.

When it took over its cable-modem service from the bankrupt @Home network, Cox Communications Inc. turned to sister company Cox Interactive Media to create broadband local start pages in 20 Cox cable-modem markets, with plans to add the remaining 15 in the coming months.

But these are not the video and Flash animation meccas of the past. Instead, the Cox local portals focus on local content and search tools. That shift stems from a better understanding of what broadband users do online, according to Cox Interactive Media CEO Paul Winter.

"What do we know? Well, we know that simply delivering television content over the Internet is not going to drive high usage," he said. "People stream video and stream audio, but the vast majority of the early audience — and it is an early audience — the vast majority of the early audience use high-speed, always-on broadband access just to do more of the same.

"They do it to search, to find information, to research local information and so on."

ISP EarthLink Inc. is banking much of its future on broadband service, but it, too, is focusing on applications rather than content.

Much of that has to do with a realization that people view the Internet largely as a tool, not a toy, according to vice president of products and services Tom Andrus.

"The Internet is about you working with this big database and getting things out of it," he said. "It's not about you kicking back in your chair and watching C-SPAN. So that is where that model kind of broke down a little bit."

For that reason, EarthLink doesn't consider broadband-content acquisition to be part of its core strategy.

"It is just far from what we do," Andrus said. "What we do is provide great Internet access and provide the applications — which can be the software that we give you on your machine, or it can be the Web site that we give you to help you get information quickly.

"It can be newsgroups — or it can be your own Web site, and we do that kind of thing — and [we're] not necessarily an entertainment company."

SOUTHERN STRATEGY

On the telecom side, BellSouth Corp. has bucked the outsourcing trend in creating its own portal. Over the past 15 months, it has crafted its own service by gathering content supplied from partners, including The Walt Disney Co., CNET Networks Inc. and AtomShockwave Corp., owner of AtomFilms.com.

But BellSouth didn't bite on an exclusive broadband portal — its portal serves dial-up and broadband customers with content encoded for both data rates. That was done in part as a way to lure dial-up customers to the DSL experience.

"We want to upsell our dial customers to DSL, but if you send your dial customers to one place and your DSL customers to another — and the dial customers don't really have an idea what's available in DSL — how are they going to know there is a reason to upsell?" asked BellSouth director of portal services Tim Hill.

Like Cox, BellSouth has also found that broadband customers tend to use the Internet for the same things as dial-up customers — searching, gathering information, e-mail and chat.

"Just because you have a high-speed line, it doesn't mean that you want to sit and watch what I call the talking heads," Hill said. "If you want to watch talking heads, generally that's why you go to CNN and turn on the TV.

"You will stream video, you will stream audio or play games, but fundamentally, you still have very similar habits to what you did as a dial user."

BellSouth also doesn't want to slow page loads with weighty video, so it has concentrated on a text-dominated screen with no prominent, built-in video player. A section with links leads users to broadband and narrowband-encoded multimedia content.

But while it might not be the only DSL-service priority, broadband content is something BellSouth looks to expand through partnership deals with producers.

"We do think it is important for us to continue to bring in broadband elements to the site for customers to use," Hill said. "We do think a destination that has broadband content, and continues to enhance and enable and show customers the broadband content that is out there, is going to help drive DSL customer retention, usage and acquisition."

NOT DEAD YET

Providers may be all over the map in terms of content strategy, but it is clear that content no longer dominates the ISP business model, said Jupiter's Laszlo. But as multiple-provider access becomes more common on cable systems — and as mainstream ISPs like EarthLink and America Online get involved — there is a possibility broadband portals will stage a comeback, according to Laszlo.

"We've certainly seen some people give up the content game; whether temporarily or permanently, I think it is still to soon to say," he said. "But I think there are still a fair number of companies that — whether they are doing an excellent job or not right now — they are definitely committed to it, over the long-term."

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