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Matt Stump
AOL Online Networks President Bob Pittman issued a strong defense of today's narrowband world while sketching out AOL's plans for a broadband future at a Kagan Seminars Inc. panel on the new digital household last week.
While AOL and other ISPs fight the cable industry in court over the open access issue, Pittman said AOL is also winning the business battle.
AOL just passed 18 million subscribers, Pittman said, giving the online service a running growth rate of about one million subscribers each quarter. North American cable operators just passed the one million mark with cable modems this summer, nearly two years after its initial launch.
And even when cable modems enter the market, Pittman claimed AOL isn't losing any ground.
Of those AOL customers signing up from broadband service, 78% still pay $21.95 a month to AOL for access and content, he said, while only 22% drop their AOL subscription to the $9.95 a month content fee only service.
"Broadband is a narrowband add-on feature," Pittman said. "It's not a replacement for narrowband. It's just faster."
One reason AOL subs stick to AOL's backbone, he said, "is that no one is tethered to one computer." With broadband, the connection is all or nothing, Pittman said. But with AOL, and new telephone technologies being developed by Lucent Technologies, customers will automatically get connected at whatever speed is available on whatever computer or computers are on in the home. "That's the future of broadband."
AOL's growth has been fueled by consumers, not technology, Pittman emphasized. AOL users spent 14 minutes a day online in 1996. That figure has climbed to 54 minutes a day in 1999. E-mail and chat make up nearly 40% of all online usage, while e-commerce, content and services account for another 40% of time spent online.
Pittman also disputed the thought that people will watch TV on the PC. "You can watch TV on the PC, but no one except the geeks are going to do it."
Still, AOL is working on plans to allow consumers to access AOL via Palm Pilots or screens on telephone handsets or the television. Pittman suggested consumers would use "buddy lists" and "instant messaging" with AOL TV, interacting through the TV the same way they interact today on their PCs.
AOL TV users will be able to get news in-depth, cruise through interactive program guides and access e-commerce applications from AOL servers. "AOL can help you enhance your TV experience."
But the key, Pittman said, is listening to consumers first. "Your TV makes a terrific PC," he said. "I have to understand the activity, then imbed interactivity into it," he said. For instance, "people want one e-mail address available to them from 10 different locations," he said, not 10 different e-mail addresses.
Pittman also took shots at ISDN and the free PC/free ISP craze. ISDN requires a complicated installation and "no clear multimedia benefits." Lucent's plug-in wall modem for ADSL detects variable speeds in bandwidth connections. "That's the future of broadband because you don't have to set anything up."
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