Here’s to the Decline of an Evil Giant
The hand-wringing over America Online’s purchase of Time Warner will only increase now that the Federal Trade Commission has approved the merger. The key question: Will AOL remain evil?
The answer is an unqualified yes. But there are powerful forces at work that will steadily weaken AOL’s ability to interfere with the armies of light--those committed to a free and open Internet.
Critics of the merger fear that AOL will dominate high-speed network connections through Time Warner’s extensive cable holdings and will attempt to use Time Warner’s valuable content--such as the Sports Illustrated franchise--as a cudgel to force more people to sign up for AOL.
But AOL’s purchase of a traditional media company is a sign that America Online has effectively peaked. Think about it: Do you know anybody in this country who hasn’t already outright rejected America Online, tried it and escaped, or remains a happy handmaiden to Satan--er, AOL? Who’s left? The company was clearly reaching the top of its pyramid of growth. The Time Warner purchase is an attempt to reinvigorate itself.
It’s not going to work.
AOL has fought a skillful campaign against the open boarders of the Internet, but it’s a war the online giant must eventually lose.
AOL is evil because it markets itself as an Internet service provider, but the company resists connecting its services to the wide-open Internet until it has no choice. The most current contretemps over this walled-garden approach to telecommunications involves AOL’s instant messaging system, which works only with systems owned by AOL.
The Federal Communications Commission is expected to rubber-stamp the FTC’s blessing of the merger but may require AOL to open up its instant messaging technology so that the program can operate with software developed by other companies.
Up until now, AOL has broken all attempts by developers of other instant messaging systems to link the groups of users together. This is classic AOL behavior. The company refused to let mail in or out of its proprietary system until the number of Internet users became so great that the company had to put in a glitch-prone e-mail relay to the world at large.
Once the World Wide Web took off, AOL grudgingly let its users peek at cyberspace outside the company’s proprietary world. What AOL users were never told is that Web pages would load at least 10% faster if they were using a true ISP, one based on Internet standards. And it wasn’t until flat rates became standard on the Internet that AOL bit the bullet and eliminated connect-time charges for its users.
AOL got very big very fast by creating a national system that made it very easy to get your computer connected to a network. By the time pure Internet tools arrived that were just as easy to install, use and maintain as AOL’s offerings, the AOL marketing juggernaut had successfully positioned the company, in the minds of many consumers, as synonymous with the Internet.
In reality, AOL is opposed to everything the Internet represents.
As a result, the company has become a kind of cyber-ghetto. A large chunk--perhaps half--of AOL users connect to the service at less than 56 kilobits per second, the maximum speed possible using a traditional dial-up modem connection. AOL literally cannot give away faster modems to users dialing up at speeds as slow as 28.8 Kbps, which makes even an e-mail download a painful experience.
Pinned down by a user base that won’t adopt faster speeds and looking at a future in which it struggles to sell advertising to folks who don’t want huge files of singing, dancing celebrity endorsements flowing through their narrow pipes, AOL has to get access to a captive audience--cable modem users--and fast, before the play money bestowed upon it by the overheated stock market evaporates.
But the real prizes for AOL are those primo magazines that Time Warner owns. Even people who see America Online for the twine-and-tin-cans system it truly is might be tempted to sign up if that were the only way to read Entertainment Weekly.
Fortunately, regulators won’t allow those kinds of exclusive deals. And in the long run, any attempt to limit distribution of Time Warner’s content to AOL would have a crippling impact on Time Warner’s influence in the journalism community. It would be like refusing to put your magazine in any store your company didn’t own.
The forces that drive the Internet--interoperability, open standards and cooperation--have beaten AOL at every turn so far. The purchase of Time Warner is just one last, desperate attempt by America Online to stave off the inevitable.
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Dave Wilson is The Times’ personal technology columnist.
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* Dave Wilson answers reader questions in Tech Q&A.; T7
