UPDATE: AOL hopes to grow on broadband, premium services

ITworld.com |  Networking

Facing analysts and press with "straight talk" on their faltering Internet business, AOL Time Warner Inc. (AOLTW) executives laid out a plan to stabilize and grow America Online Inc. (AOL) through a focus on broadband and premium services, while reining in costs, retooling advertising offerings and restoring the company's integrity.

"We don't pretend to have all the answers but I am confident we have arrived at a plan to put AOL on a path to growth," AOL Chief Executive Officer (CEO) Jon Miller told the audience during an "AOL Day" presentation in New York Tuesday.

Miller, who took the helm of the world's largest Internet service provider (ISP) last August, laid out his vision for revitalizing the struggling service as it faces slowed subscriber growth, declining ad revenue, mounting competition and government probes into the company's accounting.

At the core of the strategy is a continuation of the company's focus on improving AOL's narrowband service, while layering new premium services on top.

"Narrowband is not going away. It will continue to be a part of this market for many years," Miller said.

To shore up the dial-up service, the company plans on targeting user concerns such as connectivity issues, security and spam, while offering more differentiated and exclusive content.

On the security front, AOL announced a new deal with Network Associates Inc. to provide AOL users with free e-mail virus scanning using the security company's McAfee product. Under the agreement, a subscription security service is also being offered. Both new services will be available in the first half of 2003 with pricing revealed at that time.

Miller said that broadband growth is also central to the company's strategy, however, and AOL is concentrating on offering premium broadband offerings, particularly from other units of AOLTW's sprawling media empire. The company confirmed Tuesday that its Time Inc. division sealed a deal to provide AOL with exclusive online content from its magazines such as InStyle, Entertainment Weekly, People and Teen People.

The ISP has also forged an agreement with the CNN news division to integrate CNN video and text into its service, and is producing original content in conjunction with HBO.

CNN's pay video service, which is now available for US$4.95 a month on the Internet, will be accessible via AOL Broadband as a new member service.

Furthermore, AOL is collaborating with Warner Music Group to offer users digital music downloads, as well as the MusicNet service for streaming, downloads and CD burning. The Internet unit will also be working more closely with Warner Bros. Pictures and New Line Cinema to offer premiere video and tie-ins online.

"Our hope is to work along our entire array of our businesses, offering (a service) that is so compelling subscribers cannot live without it," said AOLTW CEO Richard Parsons.

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