The big Internet news this month has been all about monopolies.
The law doesn't cotton to monopolies, and Internet users generally see them as something to work around. (Microsoft has found that out the hard way.) But only a monopoly that controls all customers is illegal. Monopolies that control one customer aren't illegal. In the world of Internet access, that's just what we're facing.
Today's dilemma was set in motion by the FCC's approval of the AT&T-TCI merger. Quoting from the fourth paragraph of the agency's press release, "the Commission refrains at this time from imposing conditions with respect to open access to the merged company's broadband facilities." In plain English if AT&T wants to refuse other Internet Service Providers (ISP) access to its lines, as it does, that's fine with Washington.
The FCC decision opened the way to a flood of news. AT&T said it would borrow $7 billion, then upped it to $8 billion, for up to 30 years. Comcast said it would merge with Media One for $60 billion , the industry's largest merger to date. And Paul Allen, already the nation's 7th-largest cable operator, put $300 million into Go2Net.Com, adding a tender for 54% of the company at $90/share that would bring his stake to $750 million cash. (Since then the value of Go2Net shares have doubled.)
The economics of that are incredibly exciting, if you're looking for monopoly profits. Only two wires can provide broadband service and AT&T controls one of those wires in 22 million homes. If you choose to get your broadband via cable in AT&T's "service area," AT&T will not only take $50 (or so) per month from you, it will also mandate your home page (Excite), track your family's tastes, and target ads to them precisely. It won't just track you to sell advertising, of course, but (as with all portals) it will seek to sell you stuff directly. The only alternative these 22 million families will have, if they want broadband service, is to get it through the phone. If they're buying broadband Internet service from AT&T, moreover, they're unlikely to be putting a dish on their roof.
Cable franchises that had been valued based on their delivery of TV signals (a low margin, competitive business) are now being measured based on their value, not as ISPs, but as local telephone competitors and sharers of an Internet monopoly with huge potential as database marketers. Thus we have consolidation, with Comcast and Allen's Charter Communications and Marcus Cable being the heaviest buyers. Both are also in the process of replicating the AT&T business model. (That's why Allen bought Go2Net, while Comcast owns QVC.)
Certainly there are risks here for AT&T. The government might change its mind (unlikely). It might prove even more expensive than now anticipated to upgrade cable networks for broadband (very likely). Users may avoid Excite sites and ignore AT&T's pitches (possibly).
But there are bigger risks here for the rest of us. Will other ISPs, especially the Bells now dominating broadband, decide to lock-in home page defaults? Can the Bells continue to frustrate rival ISPs looking to offer ADSL service through bureaucratic and technical "bungling"? Will regulators accept a "Coke-Pepsi choice" as real competition?
This much is certain. AT&T will invest heavily over the next few years - in elections and lobbying as well as on the ground - to guarantee continuance of its shared broadband monopoly. AT&T has already locked this status into its business plans and financial projections. By the time you read this, Comcast and Allen will have sold this Clue to their financial analysts as well.
It will take courage, of course, to stand against all this, but there are allies. The Bell companies are just the most obvious allies. Rival ISPs and local governments are other obvious allies. Other allies will appear as the year goes on. Your Clue is this. The struggle will not be an economic or technology struggle, although it will be couched in those terms. This will be a political struggle.
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I learned just how difficult it is to use databases in e-mail marketing this week, from Jeff Tarter at Soft*Letter .
Jeff is one of the big guns in this business, having covered the software industry extensively for over a decade. In addition to his newsletter, which he sells by subscription, he offers research reports and conferences. He was quite proud of recent improvements to his site, so he e-mailed a general notice of his "Web Site Upgrade Sale," offering a 30% discount on subscriptions and research through April 3.
Well, reporters never pay for anything, so Jeff's note smelled spam-ic. I sent a friendly reply, suggesting he could have first offered free access to the press, done some interviews, then announced the sale when the stories broke, sending a second flight of e-mail to his customers.
"You're right, of course," Jeff replied, adding that his NetMailer e-mail merge program could have handled the job. "Our database has more switches than an airline cockpit," he wrote.
"Trouble is, a lot of important distinctions get lost, no matter how much you customize the message," he added. "I suppose it's theoretically possible to create a PR program that would take all the profiling in MediaMap PLUS a comparable company profile and create meaningfully customized story pitches. I'm not holding my breath, though."
He's right there. But it's also unlikely Jeff would have done a blanket mailing if he were printing letters and adding postage. A big e-mail list is like a big bowl of M&Ms, and it's much easier to just crunch a handful than to carefully pull out a few blue ones. But when it comes to e-mail, it pays to remember we're all diabetic.
The February ratings are in, and they reaffirm the growing link between TV and the Net. In terms of driving big numbers, the age of Jerry Yang is ending, and the age of Michael Eisner is dawning.
Take a close look at the latest Media Metrix rankings. Notice how Microsoft and Disney are closing in on Yahoo. Notice how quickly NBC has gotten Snap to number 15 - it now rivals Broadcast.com. (And see whom they've added as supporters of their new broadband portal . Notice, too, how despite its long reputation for total Cluelessness, Time Warner (the dubba-dubba-dubbayou bee) is now property number 9, and only one-third of that traffic seems to come from CNN.
Now, take a look at the first contribution from Nielsen-Netratings , the latest entrant in the Web rating sweepstakes. Who's doing the advertising to draw those users? Disney's Go.Com was a big advertiser, but Snap wasn't. The chart is also notable in identifying who's focusing their ads on a narrow target. All the online brokers are targeting narrowly, so are most of the big merchants and so (surprisingly) is AltaVista.
Your Clues are these. Want an audience? Go on TV. Want to sell ads? Know who your audience is.
The Internet Advertising list has been seething lately with debates over "ad killer" software.
Some suggested that sites offering such software should be boycotted, others demanded legal action. The best suggestion (which seemed to shut-up the discussion) came from Frank Lee, a consultant and Interactive Strategist for IBM Australia & New Zealand. What he said, basically, was "grow up." Let me quote him. "At the end of the day, it really doesn't matter how many people *see* your ad. What's important is how many prospects see it, and act on it."
Your Clue here is that not all the great Internet minds are in the U.S.
While the world was riveted on the War with Serbia, another power play was taking place on the Internet. Network Solutions , which is about to lose its monopoly on registering domain names, hijacked the Internic , even closing telnet access, forcing anyone interested in learning who has what to go through them.
I've never had a beef with NSI before, but the Internic isn't its property. It's a joint venture with the U.S. Department of Commerce. NATO, in this instance, might be The Internet Corporation for Assigned Names and Numbers . Is there any reason why NSI must be one of the new registrars? Now that would be a smart bomb...
"Great" Moments in Spam
Sometimes, a spammer is just so brazen you have to take notice. So it is with an outfit called "discount travel wholesalers," which ran its spam through the servers of @home.
I've gotten this fool's garbage before, but the latest message claimed "we had a minor problem with the 'unsubscribe' feature in our newsletter software," which "prevented us from deleting the email addresses we received in our unsubscribe file." (I neither subscribed nor unsubscribed to this spam list.) The spam continued that to continue receiving this "newsletter," I should go to a URL and enter my e-mail address.
Let me get this straight. Your spam claims to be a newsletter, your spam claims I unsubscribed, and to confirm that I'm supposed to give you my e-mail address? This is where my Clue to Jeff Tarter came from...
Clued-in is Novell for "Digital Me," an attempt to make a buck from helping Internet users maintain their privacy . The technology may be less necessary (and profitable) than Novell thinks, but it's taking a business stand on behalf of a treasured principle, and that's Clued-in thinking.
Clueless is the Simon Wiesenthal Center , for taking a forthright stand on behalf of Internet censorship.. Here's a Clue - if you censor them today, they can censor you tomorrow. If a principle is based solely on power, it's not a principle, and freedom is the most precious principle we have.