So it looks as though AOL will be split, separating out the Internet access business from the emerging advertising business. The thinking is that it will be easier to do something with each of the assets that isn't so easy right now. Presumably a buyer such as Google might want to pick up AOL's portal for the ad business.
But what can be done with the access assets? Even though AOL lost 3.8 million subscribers in 2007, it still has something on the order of 9.3 million U.S. subscribers.
EarthLink has something of a similar problem. It has a declining customer base but still has 4.2 million access customers.
The issue is what sort of buyer might exist for the Internet access customers AOL and EarthLink now are serving. Most of them are dial-up customers and are likely prospects for broadband upgrades. But the customer base is scattered all over the U.S. market.
So any potential acquirer would want a ubiquitous broadband access footprint (cable modem, wireless or Digital Subscriber Line). Only the leading wireless providers have any real shot at national coverage. Verizon, at&t or Comcast would have immediate coverage issues. Smaller ISPs might want to buy, but can't raise the money.
Does anybody have a rational business plan for rolling up the EarthLink and AOL access bases? Not one we've heard so far, even assuming all the other assets are cleanly separated.
Wednesday, February 6, 2008
AOL to Cleave Access from Ads
Labels:
AOL,
broadband access
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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