Local ISPs are in trouble. AOL’s announcement of a $42 ADSL subscriber access deal with Bell Atlantic is yet another move toward content / broadband access integration. The AOL pricing structure is competitive with charges for cable modem access, and provides significantly increased bandwidth for only twice the charges of current local ISPs. Without the AOL deal, Bell Atlantic’s ISP’s lowest charge is about $60.

The short term winner is the consumer. We get dramatically improved access to the web at reduced rates. In the long-term, however, we may be in trouble. The move toward integration of content and access is threatening the local ISP structure, in a similar fashion to Wal-Mart and the small town downtown shops. This lack of choice may well result in higher prices for content in the future.

Lee Durrance

February 3, 1999