No matter how Richard Parsons and company spin it, AOL is ultimately a loser. What the press coverage on AOL’s ever-changing business model ignores is that the online service doesn’t have legal access to broadband. AOL is frozen in digital time, able to offer most users only outmoded dial-up access. But AOL’s ignoble demise is fitting—given the company’s abandonment of its call for non-discriminatory “open access†to broadband (the key issue underlying today’s network neutrality debate).
It was AOL, after all, that led the corporate campaign in the late 1990’s calling on the Clinton FCC and the Congress to require non-discriminatory access for ISPs to cable broadband. AOL argued—as net neutrality proponents are today—that the Internet’s success had been based on federal policies requiring phone networks to serve everyone in a fair and open manner. AOL’s Steve Case understood that soon high-speed Internet service would replace dial-up and that cable systems would be the leading provider of broadband. Case desperately sought to have cable operate its Internet access service under the same federal policy safeguards that governed phone company dial-up. (He even backed a non-profit group called “No Gatekeepersâ€).
The cable industry, including Time Warner, used its political clout to prevent any policy that would have ensured the U.S. broadband system be operated in a non-discriminatory and more competitive manner. Recognizing that AOL would be shut out of broadband and that its future was doomed, it engineered a take-over of number two cable giant Time Warner. Both AOL’s Steve Case and Time Warner’s Gerry Levin shared a similar view for the future of the Internet—to turn it into an even more powerful advertising medium than television. To achieve this goal, Case quickly dropped his call for “open access†for broadband. He foolishly believed that by having AOL merge with Time Warner it would be part of the cable “costa nostra,†its broadband access assured.
On the day the merger deal was announced, Case stood by Levin as open access to broadband became another victim of corporate greed. Levin declared that the new AOL Time Warner was “going to take the open access issue out of Washington, and out of city hall and put it into the marketplace, into the commercial arrangements that should occur to provide the kind of access for as much content as possible.” That was shorthand for: “AOL will have access through us. Everyone else forgetaboutit.â€
So now Dick Parsons—who was part of the team that created the most infamously unsuccessful merger in U.S. media history—is once again re-engineering AOL. It may in the short term bring in more ad dollars, helping it fulfill the Case/Levin/Parsons vision that the Internet’s future is interactive TV-like marketing. But AOL’s real problem is that it can’t offer its users broadband since it has no legal access to it—a political cause it gave up when the going got rough in the (admittedly) politically corrupt culture of Washington, D.C. media politics. That’s why we believe the eventual demise of AOL is a fitting conclusion to its own self-serving role in the U.S. broadband debate.
