Copyright 1999 The Atlanta Constitution
The Atlanta
Journal and Constitution
January 20, 1999, Wednesday, CONSTITUTION
EDITION
SECTION: BUSINESS; Pg. 01D
LENGTH: 933 words
SERIES: Home
HEADLINE: Web portals wagering on the need for speed
BYLINE: Frances Katz
BODY:
The turn-of the-century Internet has a brand new buzzword: speed.
Tuesday, two Web portals, Excite and Snap, made deals that commit them to a
future of incredibly rapid access to the Internet. But each chose a different
path. Not even the sharpest Wall Street analyst can tell you which one took the
right road.
As Internet users become more sophisticated and view the
Internet as a utility rather than a hobby, the need for speed becomes more and
more urgent. America Online, with 15 million subscribers, rules the current
dial-up Internet world, but as more users come online looking for quick hits of
information and one-click online shopping, the 100-times-faster speeds of cable
modems or ADSL lines become more valuable. Excite and Snap have bet their
futures on this consumer need. Two well-known Web players laying down their
chips on speed may force the industry to advance faster than has been predicted.
Excite chose to side with cable modem technology and scored a deal with
At Home Network, the cable modem arm of cable giant Tele-Communications Inc.
Excite (http://www.excite.com) will become a wholly owned division of At Home.
Excite CEO George Bell, speaking on cable network CNBC, said the
acquisition will give Excite a leg up on the future of residential Web service.
Even though At Home has only 310,000 subscribers and doesn't begin to match the
reach of portals such as Yahoo! or AOL, Excite believes it has seen the future
and it is broadband.
At Home Network Chief Executive Tom Jermoluk said
the Excite acquisition gives the combined company the marketing reach and
consumer name recognition necessary to make 1999 a "big breakout year." Excite
gets millions of page views per day in the current Web environment.
Meanwhile, Snap, a joint venture of NBC and CNet, the premier computer
news and information Web site, believes ADSL will prove to be the high-speed
winner in the end.
The company announced it was developing a new, free
portal service code-named "Snap Cyclone" designed for higher-speed Internet
users, such as those on T-1 lines and ADSL subscribers. Snap
(http://www.snap.com) already has agreements with Bell Atlantic, SBC Internet
Services and others. Initial Snap Cyclone e-commerce and shopping partners
include iVillage Inc., Preview Travel and Tower Records, which will use Snap
Cyclone's media platform to showcase and sell their goods and services with
high-quality video, audio, games and animation.
CNet President Halsey
Minor says the new service will let consumers view video clips of travel
destinations or video previews of TV shows, all available over the Net. It's
getting harder to find anyone in the industry not considering getting into the
broadband game. High-speed access via either phone or cable providers is the way
people will access the Web in the future, although neither At Home nor Snap
Cyclone is available in metro Atlanta, nor are they available in much of the
country --- yet.
"Excite is a mass consumer brand, and it will
definitely be a crucial marketing and promotional brand for broadband," says
Jupiter Communications analyst Patrick Keane. Previous Jupiter studies estimated
78 percent of Web users will still be using dial-up access providers until at
least 2002, but Keane says deals like these could speed up broadband
deployment.
Even though Keane says other portals such as Yahoo!
and Lycos should think about forming a broadband alliance, Jeff Mallet,
president and chief operating officer of Yahoo!, arguably the Web's most popular
site, says Yahoo! will remain independent.
"To me it seems that At Home
has a high-speed version of the AOL model," Mallet says. "You have to come and
look at their content, and then they'll let you squeeze out through the Web. I
think that's a pretty antiquated idea.
"We made the strategic call years
ago that we shouldn't tie ourselves up with one access point," Mallet says.
"Even if we are not the primary access point, you can still find us. It's a
better strategy than finding an Internet service provider or a broadband partner
because you are solely relying on their success."
Mallet, who says
Yahoo! had spoken with At Home about a possible alliance but opted out, says
with so many portals popping up on the horizon, Excite's decision to bank on
broadband might be a smart move. "They are betting on the future, not on today."
While Snap is offering content and services to ADSL and high-speed phone
customers, At Home is a content provider as well as an Internet service
provider. That is, At Home subscribers can't choose their ISP, something Mallet
and MindSpring president and COO Mike McQuary think should change.
McQuary says the Excite acquisition may signal a strategy change for At
Home. "At Home was looking for a content provider," McQuary says, "and that
means they may see themselves eventually becoming a content provider, not
necessarily an access provider. They just spent a lot of money to shore up the
content side of the house. Their role could eventually shift from access
provider to content provider. It's not that exciting to get high-speed access if
all you get is faster e-mail. With high-speed access, the content has to be even
more compelling."
MindSpring and other dial-up Internet providers argue
broadband users should be able to choose their access provider the same way they
do now. "At Home may be looking at their furture where ISP's have equal access,"
McQuary says. "There is a parallel to the cable TV model, a company like
MindSpring could be your ISP, but At Home might be like HBO."
GRAPHIC: Graphic :
MERGER SNAPSHOT
At Home
Corp., an Internet access provider soon to be controlled by AT&T
Corp.,
agreed to acquire No. 2 Internet search service Excite Inc. for
about $ 6.7
billion in stock.
Terms: At Home will issue 1.04 of its shares for each
share of Excite,
or about $ 106.27 a share.
Premium: The offer
represents a 57 percent premium to Excite's closing
price of $ 67.50 Friday.
Largest shareholders: Cable television company Tele-Communications
Inc.,
which will be acquired by AT&T this quarter, is the largest
shareholder.
Cox Communications is the second-largest shareholder.
Corporate strategy:
The purchase fits AT&T Chairman C. Michael
Armstrong's strategy of
expanding the No. 1 long-distance telephone
company's Internet business by
combining Excite's World Wide Web sites
with At Home's high-speed cable
hookups. At Home also will add Excite's
estimated 17 million users and its
advertisers.
Approvals: The agreement's subject to At Home and Excite
shareholder
and regulatory approvals. It already has been approved by both
companies' boards.
Closing: The transaction is expected to close in
three months, the
companies said.
Management: Excite Chief Executive
George Bell will join the Excite
board. He will remain chief executive of
Excite as the company becomes a
unit of At Home. / AIMEE SULLIVAN /
Bloomberg News
Graphic :
INTERNET CONNECTIONS
The relationships
between some big Internet players:
AT&T is in the process of acquiring
TCI for $ 39 billion.
TCI is the majority owner of AT HOME.
Cox
Communications, of Atlanta, is a minority investor in At Home.
@Home
Network: At Home announces plans to buy Excite.
Excite paid about $ 70
million in May to be one of several search engines
on Netscape's portal.
AOL is in the process of acquiring Netscape, subject to Justice
Department review. Price tag on the deal: $ 4.2 billion
Richard Hallman
/ Staff Researcher
Graphic by Paife Braddock / Staff
LOAD-DATE: January 21, 1999
