Post of the Day
November 20, 1998

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Subject: Re: AOL, the FCC and ATHM
Author: kdewalt

[TMFKaren]: AT&T made some strong comments before the FCC today in which they implied that their proposed merger with TCI could fall through should the FCC permit Internet cable lines to be open to everyone.

It is a really interesting question, and I've been thinking a lot about what the impact would be on @Home of the FCC forces them to "open their pipes" to all ISPs.

I just don't think that the market is mature enough to even guess at the ramifications of this event for @Home several years from now. Some random thoughts:

1. When Intel was forced to allow AMD to copy its microprocessor architecture, Intel balked at IBM's demands. As it turns out, this move standardized the industry on Intel's architecture and the rest is history.

2. When the Internet exploded in 93-94, everyone predicted the death of AOL. After all, why would anyone pay for AOL if the same service (or in many cases, better service) could be obtained for cheaper through dial-up ISPs? The reality was that the Internet allowed AOL to expand exponentially.

  "Isn't it possible that forcing @Home to provide open access will be the BEST situation for @Home? Is there a faster way for @Home to grow than making the service available to AOL's 13 million subscribers?"

Certainly @Home is planning on its content being a great revenue stream and is ready to compete with AOL. But @Home also has the exclusive contracts with cable operators and gets a portion of the subscriber revenue. Lots of $$ to be made here.

Isn't it possible that forcing @Home to provide open access will be the BEST situation for @Home? Is there a faster way for @Home to grow than making the service available to AOL's 13 million subscribers?

Beyond that, what would "open access" mean on a technical level? Suppose @Home must provide open access to AOL. Must they also provide equal caching facilities to AOL (caching allows pages to be downloaded much, much quicker)? Must they provided a minimum bandwidth to AOL's sites? What if AOL wants to offer a service which is (conveniently) incompatible with @Home's infrastructure? Remember this is Internet Protocol, a packet-switched protocol. Very different from regulating circuit-switched protocols like the public phone system with well-defined quality levels. Lots of questions here, and lots of technology that evolves quickly.

  "Don't forget that there are more TV's than telephones in the US. And every one of them may have a digital set-top box in a few years which fundamentally changes our entire society."

In the end, I have to believe that @Home and AOL will partner. AOL needs broadband, @Home is leading the charge. @Home needs subscribers, AOL is well ahead of the pack.

With broadband, full-duplex access into America's living rooms, I have to believe that @Home will still find a way to make us all rich.

Don't forget that there are more TV's than telephones in the US. And every one of them may have a digital set-top box in a few years which fundamentally changes our entire society. If there is a discontinuous innovation in the making, it is certainly here and not on our PCs.

Sorry for the long post!


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