AOL and Time Warner recently merged to form a massive multimedia company. The newly formed company will offer residents, off-campus students, and organizations in the Athens community a more advanced Internet and cable technology.
Problem
The Athens City Council has some concerns with Road Runner’s emergence into Athens. We have been asked to investigate the effects of AOL Time Warner’s Internet service on the Athens community.
Purpose
This consulting report will explain information about AOL Time Warner
and their emergence into the Athens area. The following topics are
included in the report:
· Company backgrounds
· Merger
· Synergies
· Telecommunications Act of 1996
· Federal Trade Commission
· Federal Communications Commission
· Digital Cable Technology
· Competing Technologies
· Current Internet service providers in Athens
· AOL Time Warner in Athens
· Benefits to the User
· Effects on the Athens Community
· Survey of the Athens Community
· Recommendations
Recommendation
It is our recommendation that the Athens city council should allow AOL Time Warner to bring their services to the Athens area. The community will benefit in many ways from the accessibility of a high-speed Internet and other services brought by AOL Time Warner. However, we recommend that a limited contract be signed for no more than three years due to the possibility of other technological advances that could bring a less expensive, but equivalent service to Athens.
Company Background
Time Warner
Time Warner, with history dating back as far as the 1920’s, is the second leading cable provider in the United States with 20 million subscribers (AOL Time Warner, 2001). In addition to the cable service, they also have an extensive media portfolio. Their media endeavors include publications, filmed entertainment, music, and television networks. The publications are through Time Inc. magazine group, which prints 64 magazines such as Time, Sports Illustrated, and People. Studios such as Warner Brothers and New Line Cinema produce movies and television shows such as Batman, The Matrix, Friends, ER, and Seinfeld. Warner Music has produced artists such as Eric Clapton, The Red Hot Chili Peppers, and Faith Hill. Their television networks include TNT, CNN, The Cartoon Network, and more. Recently, Time Warner has also offered the high-speed Internet service, Road Runner, with 946,000 current subscribers (Salomon Smith Barney, 2001). For more information on Time Warner, refer to Appendix A.
AOL
AOL was created in 1985 by Steve Case and Jim Kimsey, and gained the America Online name in 1989 (AOL Time Warner, 2001). They are the leading Internet service provider (ISP) in the United States with over 26 million subscribers. Instant messaging and email are just some of the Internet services that they offer. The instant messaging service began in 1996 and allows AOL and other Internet users to communicate and transfer files while online. AOL is also one of the most popular e-commerce platforms with users that spent a total of $20 billion on e-commerce in 2000. AOL Internet subscribers spend an average of 63 minutes per day online and 75 percent of them shop online. AOL also owns entities such as MapQuest and Compuserve (Salomon Smith Barney, 2001). For more information and background on AOL, refer to Appendix A.
Merger
On January 11, 2001, AOL and Time Warner completed the merger. The newly formed entity combines the historically passive television experience with the interaction of the Internet. The companies complement each other’s operations in a way that forms an almost symbiotic relationship. They are the first company to bring together the online audience, desired media content, and means of distribution (Merrill Lynch, 2001). The short-term benefits include a greatly increased customer base, a decrease in advertising expenses, a jump on the competition, and better technology for Internet distribution. The combination of the technology and communications industries will, in the long run, create the ability to provide greater material and content in a faster manner to Internet subscribers. Over time, AOL Time Warner’s advantage over other media and Internet providing companies will create a larger performance gap between them and the traditional competition (Salomon Smith Barney, 2001).
Synergies
Operational
The operations of AOL Time Warner allow the two companies to combine activities to reduce expenses and redundancies, and to expand to new markets. As far as advertising is concerned, certain expenses will be reduced because the companies can now advertise each other’s characteristics in their normal, ongoing activities. For instance, AOL could host a listening session for its subscribers that would offer a streaming preview of a musician’s upcoming single or album. First, the playing of the music would generate interest for AOL’s subscribers and Internet users because it would provide an experience not offered by competitors. Second, the playing of the music would promote record sales, which would directly affect Time Warner. The cost of the listening session would be low, and the advertising costs would also be minimal. The content could be free because AOL would not have to pay for the rights to the music. Eventually, offering more than one type of media through streaming would increase the revenues of the AOL Time Warner without major costs (Merrill Lynch, 2001).
There are six areas of AOL Time Warner that bring in revenue: cable, AOL, television networks, filmed entertainment, publishing, and music. Each area brings in a portion of the total revenue stream and each will take on different changes in order to drive revenue up and increase the value of AOL Time Warner. For more information about the six operational synergies refer to Appendix B.
Financial
The Internet service provided would use the already laid cable lines in order to reduce redundancies. The only new cable line that would be needed would be for upgrades and in areas that are not already reached. AOL Time Warner can expand to new markets by laying new cable lines. AOL will also be able to reach every market that Time Warner currently occupies. Time Warner will also be able to reach new markets through the increased distribution of their material over the Internet. AOL Time Warner will also reach overseas markets better because of their content combined with their distribution technology (Salomon Smith Barney, 2001).
Table 1: Financial Information
Fiscal Year EPS Ratio P/E Ratio Revenue*
Dec/2000 Actual $ 0.94 47.8 $ 36,213
Dec/2001 Expected $ 1.23 36.5 $ 40,700
Dec/2002 Expected $ 1.50 29.9 $ 46,614
*Revenue in millions
The above table shows the expected growth of AOL Time Warner. The EPS Ratio and revenue both increase while the P/E ratio decreases. Also, the stock price is expected to increase from $44.90 to $70 after 12 months. All of this information shows an increase in the financial worth of the company due to the merger (Dain Rauscher Wessels, 2001).
Tax
The newly merged AOL Time Warner will not be paying federal income taxes
for several years. Since AOL employees exercised stock options in
the past few years, AOL Time Warner has $11 billion worth of future tax
write-offs. If the company had merged in 2000, AOL Time Warner would
have owed $551 million in federal, state, and foreign taxes. Since
the merged company is currently giving stock options to all employees,
AOL Time Warner’s tax benefits will rise if the stock continues to do well
(Pender, 2001).
Telecommunications Act of 1996
The goal of the Telecommunication Act of 1996 is to allow any company to enter the communications business, creating a competitive market. The 1996 Act updates the Communication Act of 1934 and provides new national policy framework for competition and market forces (Telecommunications Act of 1996 and the Changing Communications Landscape, 1996).
An original bill to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition, and for other purposes. (Telecommunications Act of 1996 and the Changing Communications Landscape, 1996).
This act has changed the way people work, live, and learn. The act touches a wide range of aspects of communication including: telephone services; cable programming; video services; broadcast services; content and programming on television and computer networks, including the internet, and services provided to schools. The Telecommunication Act of 1996 provided the basis for the FTC and the FCC regulations on the AOL Time Warner merger (Telecommunications Act of 1996, 2000).
Federal Trade Commission
The Federal Trade Commission (FTC) enforces federal antitrust and consumer protection laws. The Commission works to enhance the smooth operation of the marketplace by eliminating acts or practices that are unfair or deceptive. The Commission’s efforts are directed toward stopping actions that threaten consumers’ opportunities for informed choices (Vision, Mission, & Goals, 1999). For more information on government agencies, please refer to Appendix C.
FTC Regulations on the AOL Time Warner
The FTC has accepted the AOL Time Warner merger and, in doing so, has set up a number of restrictions.
Access Provisions. Before AOL Time Warner can bring their services into an area, they must have at least one non-affiliated ISP provider available to subscribers. AOL Time Warner must also enter into agreements with two additional non-affiliated ISP providers within 90 days after making AOL broadband service available. The FTC must approve these ISP providers. If AOL Time Warner fails to meet these requirements within the specified time period, the FTC will appoint a trustee that has the authority to make these agreements.
AOL Time Warner has the option to enter into additional contracts with non-affiliated ISPs and are required to act in good faith when negotiating with them. However, AOL Time Warner is not required to enter into additional contracts if they will affect the capacity of their broadband network. Additionally, AOL Time Warner is prohibited from interfering with content that passes through the cable lines by non-affiliated ISPs (FTC Approves AOL/Time Warner Merger with Conditions, 2000).
Pricing. Aside from their affiliation with the Road Runner service, AOL also offers DSL Internet access. The FTC requires that AOL charge the same price for DSL in areas that do not have Road Runner access. This prevents AOL from increasing prices as a result of a broadband monopoly in a certain town or city (FTC Approves AOL/Time Warner Merger with Conditions, 2000)
Federal Communications Commission
The Federal Communications Commission (FCC) is an independent United States governmental agency and was created by the Communication Act of 1934. The FCC regulates interstate and international communications by radio, television, wire, satellite, and cable. Their jurisdiction covers all 50 states, the District of Columbia, and US territories (About the FCC, 2000).
FCC Regulations on the AOL Time Warner Merger
The FCC has examined the potential effects of the AOL Time Warner merger on high-speed Internet services, instant messaging, carriage of television broadcast signals, increased concentration among Multi Channel Video Programming Distributors (MVPD), and competition among MVPDs. The FCC has established many regulations concerning the AOL Time Warner merger.
Choice of ISPs. AOL Time Warner must open its cable systems to competing ISPs. AOL Time Warner also must let customers choose a participating ISP.
First Screen. AOL Time Warner must allow all unaffiliated ISPs to control the content of their customer’s first screen.
Billing. Participating ISPs must be able to directly bill their subscribers.
Technical Performance. AOL Time Warner must offer the same technical performance standards to unaffiliated ISPs that it offers affiliated ISPs.
Rights to Disclose Contracts to the FCC. AOL Time Warner may not enter into a contract with an ISP that prevents the ISP from disclosing the terms of the contract to the FCC.
Enforcement Procedure. The FCC has drawn up procedures concerning any disputes that AOL Time Warner may have regarding the conditions set by the FCC. These procedures are designed to be resolved within 60 days of filing the complaint.
Instant Messaging (IM). AOL Time Warner must file a progress report with the FCC every 180 days. This report must describe the actions that it is taking to achieve interoperability of its IM and other offerings (FCC Approves the AOL Time Warner Merger,2001).
Digital Cable Technology
Millions of Americans have been utilizing the services offered by cable companies to view their favorite television programs since cable's origin in 1948 (National Cable Television Center, 2001). In the beginning, cable systems were established to provide services to households in geographically remote areas where reception of over-the-air television signals was poor. From there, the cable industry expanded to provide viewers with multiple channels from all over the nation.
In addition, the cable industry has journeyed into another aspect of
the telecommunications realm, the Internet. Now, in the 21st Century,
the demand for high-speed Internet access is greater than ever. The
problem that has resulted from this demand is that the telephone companies,
which have been the main provider for Internet access in the past, do not
have the means to provide Internet access at an extremely fast rate.
As a result, the cable industry and the telephone companies are striving
for a fast, yet affordable, answer to this problem. The answer has
been found in digital cable.
Digital vs. Analog
The beauty of digital cable lies in the manner in which information is sent through the cable lines. Cable companies have utilized analog technology to transmit their signals since the beginning. To transmit an image on analog television, every pixel is included in the signal. A standard screen includes 525 lines of 720 pixels, for a total of 378,000 pixels per frame (Cringely, 2001). This large amount of information requires 6 MHz of bandwidth to transmit each channel. The coaxial cable lines in Athens, which have 400 MHz of downstream bandwidth, can carry the equivalent of 60 analog TV channels. Therefore, using analog signals leaves little bandwidth for any additional information to be sent through the cable lines. The answer to this problem of limited bandwidth is digital transmission.
The advantage digital has over analog is that an analog signal cannot be compressed as well as a digital signal. Digital cable can compress, or squeeze, 16 or so digital channels from each analog channel. This is referred to as 16 to 1 (16:1) compression (Friedland, 1997). This compression allows for larger amounts of information to be sent through the cable line. Seeing that television channels do not use all of the available bandwidth, there is room left to transmit additional information. This extra bandwidth is used to send and receive information to and from the Internet. As a result, digital cable subscribers receive more channels, better picture quality, and high speed Internet access.
How It Works
The cable company serves as its own Internet service provider and establishes an Internet connection through a router on a leased line. This router is then connected to the cable company's head-end controller to be sent through the cable lines. The head-end controller also receives television transmissions from a satellite at the cable headquarters. In order to deliver digital televisions and Internet, the head-end controller encodes the information as a digital signal and broadcasts the signal down the cable on an unused channel.
Seeing that the traditional coaxial cable lines cannot transmit large amounts of information, cable companies are building the back-bone of their network with fiber-optic cable. Fiber-optic cables consist of thin filaments of glass or other transparent materials, which carry beams of light. A laser transmitter encodes frequency signals into pulses of light and sends them down the optical fiber to a receiver, which translates the light signals back into frequencies. The composition of fiber-optic cable allows it to transmit larger amounts of information than coaxial cable.
To send the data over the fiber-optic network, laser transmitters convert 6 MHz signals sent from the head-end into optical signals. At the edge of a neighborhood, a laser receiver reconverts the signals so they can again be transmitted over coaxial cable, which goes into each individual house. The coaxial cable then enters the subscriber’s home and is split to run a line to the television and one to the subscriber's computer. The line that is run to the television is connected to a digital box that converts the signal to be viewed. The line that is run to the computer is connected to a cable modem. The cable modem demodulates the incoming signal and translates it back into language that the computer can understand. The cable modem communicates with the computer through a 10BaseT Ethernet card, which is installed in the subscriber's computer (Barnes and Fienberg, 1997).
What It Offers
The arrival of cable Internet will provide the broadband access needed to establish high-speed Internet access for all types of users. The technology involved with cable Internet has the capability to be the fastest connection, next to expensive T1 and T3 lines. For more information concerning comparative Internet speeds, refer to Appendix D. In theory, cable modems can receive data at 30MBPS; however, the Ethernet interface through which the modem communicates can only receive data at 10MBPS (Barnes and Fienberg, 1997). The fact that cable modems can handle 30MBPS is important because as technology advances, computers will also be able to handle information at that speed. In reality, cable modems currently receive data at an average of 1.5MBPS. This means a 2-megabyte file, which would take 9.3 minutes to download with at 28.8kbps modem, takes only 11 seconds with a cable modem (AOL Time Warner Cincinnati, 2001).
The increased speed that is available with cable Internet also allows users to effectively utilize a variety of current and future online technologies. For example, businesses and educational institutions can use cable Internet to utilize video conferencing. This will allow for meetings and lectures to take place between people in different parts of the world. To see a complete list of technologies that can be used with cable Internet, see Appendix E. The speed of cable Internet will allow users to make use of future technologies.
Negative Aspects of Digital Cable
Last Mile. The broadband network that digital cable technology utilizes is far superior to the alternatives offered by dial-up and DSL services. The fiber-optic cables that make up the back-bone of AOL Time Warner’s network allow for data to be transferred at tremendous speeds; however, there is a major problem with their system. This problem, referred to as the “Last Mile”, is the fact that the entire cable network is composed of fiber-optic cables except the lines that actually enter the subscriber’s home. The cable company’s head-end, which transmits all of the information to the users, is connected with individual neighborhoods using fiber-optic cable. This cable is wired to a laser receiver, located in each neighborhood, which reconverts the signals so they can again be transmitted over coaxial cable and sent into the subscriber’s home. As a result, the data is transferred from the cable company to the neighborhoods at tremendous speeds, but the data transferred from the laser receiver to the individual user is significantly slower. The best solution to this problem is to re-wire every neighborhood with fiber-optic cable; however, AOL Time Warner is not currently prepared to cover the extreme expense and hassle of re-wiring the “Last Mile.” As a result, fiber-optic technology can continue to advance, and AOL Time Warner can improve the efficiency of data transfer from their headquarters to individual neighborhoods; but, until they are willing to complete their fiber-optic network, the benefits to individual users are somewhat limited.
Technology Life Span. Now in the 21st Century, telecommunication technology is advancing at a tremendous rate. New innovations and methods of data transfer present alternative, more efficient mediums through which information can be sent almost everyday. With technology doubling at such an incredible rate, data transfer technologies can become obsolete in a mater of months.
No Internet advantage can last more than a couple of years. In 1999
and
2000, over 150 million kilometers of optical fiber were laid worldwide,
enough to stretch to the sun. Hundreds of billions of dollars have already
been invested by metropolitan fiber-optic network builders (MetromediaFiber,
Level 3 Communications), optical hardware companies (Avanex, ONI, Sorrento)
and optical service providers (Yipes, Cogent, Sphera). These companies
are already rendering the metropolitan DSL debate moot with thousand-fold
increases in price performance over existing technology. Similar breakthroughs
are on the way in residential wireless (Gilder and Swanson, 2001).
As a result of this situation, users are not recommended to commit to extensive contracts or invest in expensive current technologies to improve their Internet connection. Although many users demand high-speed Internet now, it is recommended that they satisfy their needs without committing to a specific technology for an extended period of time.
Competing Technologies
There are new advances made in the telecommunications industry every day. These advances allow for alternative methods of connecting to the Internet. Each technology has unique positive and negative attributes, which need to be considered by individual users.
Dial-Up
Dial-up Internet service is one of the basic ways to connect to the Internet. The Dial-up access allows the modem on a subscriber’s computer to connect through the telephone line to an Internet service provider’s modem to establish an Internet connection (FrogNet Internet Services, 2001).
Positive Negative
· More secure access due to a new IP address for each connection
(Paonita, 2000)· Lowest cost for connection · May be an hourly
charge (FrogNet Internet Services, 2001)· Slowest connection (FrogNet
Internet Services, 2001)· Cannot use phone line while connected
to Internet (FrogNet Internet Services, 2001)
DSL
Digital subscriber line, or DSL, is an option for Internet users that offer an always-on Internet service through the subscriber’s phone line. The telephone company splits the voice line, sending data over the Internet at high frequencies and sending telephone calls at lower frequencies. In order to receive DSL, the customer must go through an ISP. When installing DSL, the proximity of the local telephone interchange is necessary because those who are too far away may be denied. For a map showing the three-mile radius that the DSL service can reach in Athens, see Appendix F. The following include the positive and negative aspects of DSL (Paonita, 2000).
Positive Negative
· Internet and telephone services can be used simultaneously
(Paonita, 2000)· Constant connection· Asymmetrical data transfer·
Provides almost 150 times the speed of a 56k modem dial-up connection,
depending on usage during peak hours (Paonita, 2000) · Customer
must be located within three miles of the local phone company to receive
DSL (Paonita, 2000)· Installation may be a hassle for some households
and businesses (Paonita, 2000)· Does not provide as secure access
as other options due to a permanent IP address (Paonita, 2000)·
Hardware and installation expense
Wireless
Another competing technology of digital cable is the optical wireless Internet service. Wireless uses infrared light in the air instead of radio waves through optical fiber to transmit data, video, and sound from one point to another (Gutscher, 2001). Invisible lasers are harmless to the human eye and offer high-speed Internet access that is beamed through office and home windows (Grice, 2001).
Positive Negative
· Internet and telephone services can be used simultaneously
(Grice, 2000)· Constant connection (Grice, 2000)· High speed
(Grice, 2001) · Clouds, fog, and hilly terrain may interfere with
the laser’s path and cause outages (Grice, 2001)· Limited window
of opportunity before other competing technologies take hold (Grice, 2001)·
Does not provide as secure access as other options due to a permanent IP
address (Grice, 2001)
Satellite
The satellite service accommodates both the Internet and satellite television user by using a single satellite dish for sending and receiving information. A satellite dish is mounted to the customer’s home or office. Two coaxial cables connect the satellite antenna to the PC and to the television. The subscriber’s antenna sends and receives data via an orbited satellite approximately 22,300 miles above the equator. The satellite communicates with a hub facility, which has direct connection with the Internet (How it Works, 2001).
Positive Negative
· Internet and telephone services can be used simultaneously
(What is Starband?, 2001)· No special telephone connection or cable
modem is necessary (What is Starband?, 2001)· Always on (What is
Starband?, 2001)· High speed and is 10 times faster than the fastest
dial-up service (What is Starband?, 2001) · Does not provide as
secure access as other options due to a permanent IP address (Zuckerman,
2001)· Slow upload speeds may affect heavy downloads (Zuckerman,
2001)· High costs: $600 start-up costs along with $70 per month
(Zuckerman, 2001)· Connection may be sensitive to unfavorable weather
conditions (Zuckerman, 2001)
Current Internet Service Providers in Athens
Currently, residents and organizations in Athens can choose DSL or Dial-up service for Internet access.
DSL
Verizon, the local phone company, has partnered with several Internet service providers to offer DSL service in Athens. To obtain DSL service, the Internet user must pay both Verizon and the ISP.
ISPs that provide DSL in Athens are:
· DialNet
· FrogNet
· EurekaNet
Verizon has a variety of packages from which the user can choose. Each one accommodates the needs of different users and is individually priced (Verizon Online, 2001). For information on the various packages offered by Verizon, refer to Appendix G.
Dial-Up
Dial-Up is another type Internet access offered in Athens. It also utilizes the phone lines; however, the Internet user does not have to pay additional fees to Verizon.
ISPs that provide Dial-up in Athens are:
· DialNet
· FrogNet
· EurekaNet
· Microsoft
· America Online
· Verizon
· DragonNet
Pricing for each of these Internet services is detailed in the chart below.
Internet Providersin Athens Availability & Pricingof DSL Availability
& Pricingof Dial-Up
DialNet $58.50/month unlimited Hourly Charges:$1
(5pm-12am)$0.25 (12am-5pm)$0.5 (8am –5pm)
FrogNet $19.95/month unlimited* $19.95/month unlimited
EurekaNet $49.95/month unlimited* $19.95/month unlimited
America Online Not available $21.95/month unlimited
DragonNet Not available $18.95/month unlimited
Microsoft Not available $21.95/month unlimited
Verizon Not available $19.95/month for 150 hours
*These prices are in addition to the fees the user must pay to Verizon, which are detailed in Appendix G.
Sometimes the monthly fees can be slightly lower if the user pays several months or a year in advance. Also, several of the companies that offer Dial-up service have packages that accommodate users’ individual Internet needs with more limited hourly plans. (Communication Network Services, 2001); (FrogNet, 2001); (CoreComm, 2001); (AOL Pricing Plans, 2001); (MSN, 2001); (Verizon Online, 2001). For more detailed information about each of these Internet service providers in Athens, refer to Appendix H.
AOL Time Warner in Athens
The Columbus, Ohio division of AOL Time Warner is extending their digital capabilities to Athens, Ohio. This extension will make AOL Time Warner's digital cable and Internet services available to the Athens area. AOL Time Warner will be offering a variety of packages for the digital cable television that will be offered in Athens. For a more detailed list of the features, packages, and pricing of digital cable television, refer to Appendix I. AOL Time Warner's high-speed Internet access, Road Runner, will provide residents, businesses, schools, and government buildings with the broadband Internet access that is necessary in today's technological world. Road Runner is cheaper and faster than DSL, which is the only alternative high-speed Internet access currently available in Athens. However, there are a number of technicalities that need to be addressed concerning Road Runner in Athens.
Speed
Road Runner's speed averages 1.5 MBPS. This average speed will
decrease as the number of subscribers in Athens increases. The speed
will also decrease with the number of times the cable line is split.
In addition, users will experience slower speeds during the high traffic
hours on the Internet.
Price
Customers that are not AOL Time Warner cable subscribers will be charged extra for cable installation and monthly service. Current AOL Time Warner subscribers will also be charged for installation. Also, Internet access requires the subscriber to purchase an Ethernet card. There is also a 4-cent monthly charge from the FCC and an additional charge for Athens of up to 5 percent of the customer’s monthly bill (AOL Time Warner Columbus, 2001). For more information on Road Runner’s pricing, see Appendix J.
Features
Road Runner offers users a high-speed constant Internet connection with additional features. For more information on Road Runner’s features, refer to Appendix J.
Installation
An AOL Time Warner technician will install and configure the new service. There is a non-refundable charge for installation. For more information on the installation of Road Runner, please refer to Appendix J.
Multi-User
Users who wish to connect multiple terminals to their account for simultaneous Internet access will be required to purchase additional IP addresses. For more information on the price of the additional IP addresses, refer to Appendix J.
Reliability
Road Runner provides a constant, 24-hour connection. However, Internet access will be disabled whenever there is a technical problem with the users cable service.
ISPs
Subscribers will have the option to select their Internet service provider from at least three companies including America Online. Michael Papaleonardos (personal communication, February 21, 2001) stated that Juno and Earthlink are two ISPs that are currently negotiating deals for Athens Internet access through AOL Time Warner. Subscribers can only use one of the ISPs that AOL Time Warner designates.
Facilities
Additional facilities will need to be built in Athens to accommodate Road Runner. Michael Papaleonardos (personal communication, February 21, 2001) noted that some small hub buildings, power plants, and amplifiers have already been built. As the number of subscribers increases, additional facilities will need to be built.
Policies
There is a detailed list of rules and regulations that users must adhere
by. For more information on the user policy, refer to Appendix K.
Benefits to the User
Road Runner offers many benefits to the user. Some of these benefits can be found with other services currently offered in Athens; however, Road Runner offers a combination of advantages that is difficult to ignore.
Super-fast Internet Connection
First, and most importantly, Road Runner empowers its users with a super-fast Internet connection, unparalleled to anything they have ever experienced. This innovative technology will allow the user to download large amounts of information and data in no time at all. Additionally, digital cable can provide a higher quality of picture and sound. For $39.95 per month, Road Runner will expose its members to the fastest Internet service available, at speeds of about 1.5 MBPS. Receiving speeds like this from a phone company would cost the user about $159 per month. For more information on Verizon’s prices, see Appendix G. Paying a phone company $39.95 per month will only get the user speeds of 768 Kbps, which is only half the speed of Road Runner (AOL Time Warner Cincinnati, 2001).
No Television or Telephone Conflicts
With digital cable technology, the user can simultaneously watch television, talk on the telephone, and use the Internet. Road Runner is always connected, and the user will not need to waste time logging on. As a result, this service is direct and immediately accessible to the user whenever it is needed. An additional phone line is not needed for the user to have constant access to the Internet (AOL Time Warner Cincinnati, 2001).
Secure Access
According to an AOL Time Warner employee, this service is as secure and safe as any other service currently available. During a recent electronic interview, the employee wrote, “as long as the user has File and Print Sharing turned off, there is an encryption on the system. Since the Internet itself can be an unsafe environment, free software can be downloaded for additional protection” (personal communication, March 2, 2001).
No Hourly Charges
With Road Runner’s services, the user will incur no hourly charges. The flat rate of $39.95 will permit the user to have unlimited access to the Internet (AOL Time Warner Cincinnati, 2001).
30-Day Guarantee
If the user is not satisfied, AOL Time Warner will refund the monthly fee, but not the installation fee (AOL Time Warner Cincinnati, 2001).
Effects on the Athens Community
Positive Effects
High-Speed Internet. As a faster Internet service emerges in Athens, the community will be able to advance with the times. The transfer of data will be completed significantly faster, and this will have a significant impact on local residents, schools, organizations, and business. The availability of Road Runner will attract businesses to Athens and give the community a global presence. Students, residents, and organizations in the area will be exposed to a state-of-the-art Internet service, preparing them for a world that becomes more reliant on it every day.
Growth Potential. Cable modem technology uses a large pipe for the transfer of information at higher speeds. Unlike the current Dial-Up and DSL services offered in Athens, digital cable technology has unlimited bandwidth and the opportunity for growth. The current analog technology that runs over the telephone wires has limited bandwidth and a limited growth potential. With the addition of new customers, AOL Time Warner regulates its services by adding more capacity to the network as needed (AOL Time Warner Cincinnati, 2001). Currently, this is not an option for the community of Athens.
Road Runner also has the capability to grow with technology. As
computers are able to handle increased amounts of information at one time,
the need for faster data transfer will increase. Cable modem technology
has the capability to handle data up to 30MBPS. A DSL modem can only
handle a maximum of 7MBPS (Barnes and Fienberg, 1997). For more information
concerning the speed of a cable modem, refer to Appendix D. This
will allow Road Runner to adapt its speed to new technologies.
Additionally, with the Internet connection currently provided by Verizon,
a subscriber must live within in 18,000 feet, or approximately 3 miles,
of its Central Office. This is located on Washington Street, just
west of Court Street. For a map of the 3-mile radius, refer to Appendix
F. Road Runner’s services will be accessible to all residences that
have the current Time Warner cable service or the capability of having
that service. This allows for more members of the community to have
the Internet in their homes.
Increased Competition. As AOL Time Warner plans its expansion in Athens with an Internet access service, competition in this market will see a definite increase. The Internet user in Athens will have many options when deciding which service to use. This increased competition can be foreseen as having a positive impact on the pricing of these services in this community. As more providers compete for business in Athens, the prices of their services will potentially decrease. Additionally, AOL Time Warner is required to allow three unaffiliated Internet service providers use their cable lines (FTC Approves AOL/Time Warner Merger with Conditions, 2001). With this increased competition, the price of high-speed service will decline as its quality increases.
Creation of Jobs. As Road Runner launches in Athens, the creation of jobs comes with it. According to a recent electronic interview with Michael Papaleondardos some facilities have been built in this area to accommodate this technology. AOL Time Warner currently uses local people to staff the offices and install the services. As the demand for Road Runner in Athens increases, more people will need to be hired (personal communication, February 21, 2001).
As mentioned above, businesses will be attracted to Athens and current businesses will develop as result of this super-fast Internet service. With this growth, the potential for additional jobs to be created exists.
Community Programs. According to Papaleondardos, AOL Time Warner currently provides local schools with cable. They to plan offer one free Road Runner connection to each school (personal communication, February 21, 2001). According to Guy Phillips, Athens City Council President, they provide Athens with free stations for the Government Channel, which is run from City Hall, and the Public Access channel. Additionally, city buildings are also provided cable (personal communication, February 20, 2001). America Online will be offered to East Elementary School. This is a benefit; however, other Athens schools will not be involved. In many other cities, AOL provides their service for most of the schools in the area (AOL @ Schools, 2000).
Negative Effects
Hurt Local Competition. The coming of Road Runner could hurt local Internet service providers that use analog technology because Road Runner will outperform the current competing technologies in Athens. Local competition, such as FrogNet, will perhaps suffer as a result of the more advanced technology that Road Runner can offer.
Inconsistent Pricing. The cost of this Internet service in Athens will be $39.95 per month, plus the cost of installation and other equipment fees (Time Warner Columbus, 2001). However, in the Cincinnati area, AOL Time Warner is offering the first four months of Road Runner for only $19.95 per month and free installation (Time Warner Cincinnati, 2001). The residents of Athens are at a disadvantage because it is not likely that they will receive the same promotional offer.
Survey of the Athens Community
A survey of the Athens community was taken in order to determine the characteristics relating to Internet activity and the Athens community. For further information on the survey method, refer to Appendix L. The results gave information about AOL Time Warner’s potential market, the satisfaction of Internet users in Athens, and how much current Internet users would be willing to pay for a faster service. For a more detailed look at the survey results, refer to Appendix M.
Potential Market
Currently, the people in Athens who subscribe to a high-speed Internet make up 10 percent of the Internet users. These people subscribe to DSL through either DialNet or Verizon. Therefore, the current market for high-speed Internet users is 10 percent of the Internet users. In addition, 27.5 percent of the people surveyed said that they would be willing to pay over $40 for a faster Internet service. Therefore, the range of potential customers in Athens is from 10 percent to 27.5 percent of the Internet users.
Satisfaction of Internet Users in Athens
Statistically, the people in Athens who are satisfied with the speed of their Internet service pay more than the people who are not satisfied with their service. Therefore, it can be concluded that the more a user pays for the Internet leads to a greater satisfaction with their service. Logically, slower services have to charge less because of the high amount of competition, and the faster services can charge more. AOL Time Warner provides one of the fastest Internet services available, so it can be concluded that the Athens community will be satisfied with the Road Runner service.
What People Are Willing to Pay
The average cost for an Internet connection in Athens is $24.12 per month. The majority of the people surveyed would be willing to pay between $21 and $40 per month for a faster service. See Appendix M for further information. Road Runner will cost $39.95 per month along with other miscellaneous charges. Even though the majority is not willing to pay $39.95 or more for the service, there is a good percent of the people who are willing to pay, as stated above. In addition, the survey question was asked directly to the respondent as to what would they, themselves, be willing to pay for the service. Therefore, sharing of the cost for the Internet within households was not factored into the survey, and it is possible that there are people who would subscribe to Road Runner without paying the full cost themselves.
Recommendations
After thoroughly reviewing AOL Time Warner and the alternative technologies, it is recommended that Athens City Council allow AOL Time Warner to extend their digital cable services to the Athens area. AOL Time Warner’s digital television and Internet will benefit the residents, businesses, schools, and organizations in Athens, Ohio. Specifically, their Internet package, Road Runner, provides a more efficient, better priced medium through which users can connect to the Internet.
Seeing that technology is advancing at a tremendous rate, it is recommended
that Athens agree to a limited contract, of no more than three years, with
AOL Time Warner. New methods of connecting to the Internet are developed
everyday, and Athens needs to ensure that a long-term contract does not
hinder the availability of future technologies to local residents.
Presently, AOL Time Warner can provide the most cost efficient and up-to-date
Internet access. However, there is no indication that AOL Time Warner
will continue to provide the best overall services in the future.
For the time being, AOL Time Warner has a plethora of services to offer
the Athens community, but the city council needs to take precautions to
ensure that AOL Time Warner does not abuse their ‘potential monopoly’ in
Athens, Ohio.
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Appendix A: Timeline of AOL Time Warner
2001
AOL and Time Warner complete merger.
2000
Time Inc. acquires Times Mirror Magazines from Tribune
Company, including Golf, Ski, Skiing, Field & Stream, Yachting
and other titles.
2000
AOL reaches 27 million members—adding a new member every
6 seconds. Average online usage breaks the one-hour-a-day
mark.
2000
Real Simple, part of the People Magazine Group, launches.
2000
Fortune launches the E-50 Index and eCompany Now magazine,
definitive guides to the Internet economy.
2000
CNN.com offers first-ever online interview with a sitting U.S.
President.
2000
ICQ breaks the 85 million-member mark.
2000
AOL Argentina and AOL Mexico launch.
2000
AOL acquires MapQuest, the leading provider of online
directions and travel information.
1999
Time Warner Cable holds two video-on-demand tests in Austin,
Texas, and Tampa/St. Petersburg, Florida.
1999
AOL Hong Kong launches.
1999
ICQ reaches 40 million members, tripling its number of
registered users in the 14 months following its acquisition by
AOL.
1999
Netscape joins the AOL family of brands, followed by
MovieFone, Spinner, Winamp, SHOUTcast and DMS, the leader
in online custom market research.
1998
HBO announces transmission of HDTV channels; HBO and
Cinemax launch multiplex channels.
1998
Teen People launches.
1998
AOL acquires CompuServe and online messaging pioneer ICQ.
AOL starts delivering more e-mail and instant messages every
day than the U.S. Postal Service delivers mail.
1997
Turner Broadcasting System's bid for a hockey franchise in
Atlanta is approved; the Thrashers, named after Georgia's
state bird, begin playing in fall 1999.
1997
CNN en Español, a 24-hour Spanish channel, launches with 4
million subscribers, the largest cable launch in Latin American
history.
1997
AOL Japan launches.
1997
AOL community breaks the 10 million-member mark—and AOL
begins delivering more daily mail in the form of e-mail and
instant messages than the U.S. Postal Service
1996
Time Warner Inc. and Turner Broadcasting System, Inc.,
merge, creating the world's leading entertainment, information
and media company.
1996
People en Español launches.
1996
Bugs Bunny becomes the U.S. Postal Service's "ambassador
to youth," with a commemorative stamp series honoring the
Looney Tunes characters.
1996
AOL is publicly traded for the first time on the NYSE; Wall
Street sign is changed to WAOL Street for the day.
1996
AOL launches the Buddy List instant message feature for AOL
members, and the free AIM instant message service for
Internet users.
1995
Time For Kids launches.
1995
Time Warner and leading electronics and software companies
agree to develop a 5-inch, super-density video disc (SD-DVD)
with 15 times the storage capacity of CDs.
1995
Time Warner Cable and Time Inc. announce development of a
new online service using cable modems (Road Runner).
1995
The WB Network debuts.
1995
AOL International launches its first online service in
Europe—AOL Germany. AOL UK, AOL Canada and AOL France
follow the next year.
1994
Time Warner Cable wins an Emmy Award for its pioneering work
on fiber optic transmission.
1994
Warner/Chappell Music acquires CPP/Belwin, becoming world's
largest music publisher and largest publisher of printed music.
1994
In Style magazine launches.
1994
Turner Classic Movies launches.
1994
Turner Broadcasting System and New Line Cinema merge.
1994
The AOL community reaches 1 million members; AOL links
members to the Internet for the first time; AOL.com—America
Online's Internet portal—is announced.
1993
AOL becomes the first online service to release a Windows
version of its software. Steve Case is named CEO of America
Online.
1992
NY1 News launches, the first 24-hour local all-news channel.
1992
America Online makes key content deals with news providers
such as CNN Newsroom and the San Jose Mercury News.
1992
America Online becomes a publicly traded company, issuing 2
million shares of stock on the NASDAQ.
1990
Entertainment Weekly launches.
1990
America Online begins trying out innovative marketing
techniques of giving away free AOL software. Steve Case is
named President of America Online.
1989
Time Warner Inc. is created as the world's largest media and
entertainment company with Time Inc.'s acquisition of Warner
Communications Inc.
1989
Sports Illustrated for Kids launches.
1989
Steve Case wins contest to rename the Quantum online
service—America Online is born. The AOL service is
launched—including e-mail, games, special interest forums,
plus a groundbreaking feature allowing AOL members to
communicate in one-on-one, real time conversations.
1985
Time Inc. acquires Southern Progress Corp. (founded 1886),
adding to its roster of Progressive Farmer (launched 1886),
Southern Living (launched 1966) and Oxmoor House
(established 1969).
1985
Steve Case and Jim Kimsey conceive of a new company,
Quantum Computer Services, to deliver online information and
other services to consumers via PC modems. The World Wide
Web does not yet exist.
1982
Headline News premieres in more than 800,000 cable homes,
with updated newscasts every half-hour.
1980
Cinemax launches as a companion to HBO, making them the
cable industry's first pay-TV "tier."
1980
CNN, the world's first 24-hour, all-news network, premieres
with 1.7 million subscribers.
1979
Turner Communications Group becomes Turner Broadcasting
System, Inc., and WTCG is renamed WTBS.
1978
Time Inc. acquires cable operator American Television &
Communications (ATC).
1977
Turner Communications Group purchases controlling interest
in NBA's Atlanta Hawks.
1976
Turner Broadcasting's WTCG in Atlanta is beamed via satellite
to cable homes nationwide, becoming cable's first
superstation.
1976
Turner Communications Group purchases MLB's Atlanta
Braves.
1974
People magazine launches.
1972
Home Box Office transmits first programming to 365
subscribers in Wilkes-Barre, Pa.
1972
Money magazine launches.
1969
Warner-Seven Arts acquired by Kinney National Co. and
becomes Warner Communications Inc.
1968
Time Inc. acquires Boston publishing house Little, Brown and
Company (founded 1837).
1961
Time Life Inc. is created as the Time Inc. book division.
1958
Warner Bros. Records is founded.
1954
Sports Illustrated launches.
1950
Elektra Records is founded by Jac Holzman.
1936
Life, a weekly photojournalism magazine, launches.
1930
Fortune magazine launches.
1928
First Time magazine Man-of-the-Year features Charles
Lindbergh.
1927
Warner Bros. releases the first synchronized talking movie, Al
Jolson's The Jazz Singer.
1923
Time's first issue is published.
1918
The brothers Warner open their first West Coast Studio on a
10-acre lot on Sunset Boulevard.
1918
At Army training camp, Henry Luce and Briton Hadden
conceive the idea for Time magazine. (Time Inc. is incorporated
in 1922.)
(AOL Time Warner, 2001)
Appendix B: Operational Synergies
Cable. Roughly 34% of the total EBITDA for 2000 comes from cable television. Cable is viewed by AOL Time Warner as the foundation for their activities. The company expects to have 100% of its systems upgraded to two-way, 570 Mhz capacity in 500 home nodes by the end of 2001. This would provide for the best possible platform for introducing new services. AOL Time Warner is also adding 37,000 new digital cable subscribers per week (Salomon Smith Barney, 2001).
AOL. The next largest area that added to the EBITDA for 2000 is 28% from AOL. However, this is predicted to become the company’s largest revenue stream by the end of the year with their subscribers expected to increase to 30 million nationwide by that time. AOL is also putting efforts forth to allow their subscribers to connect to their services through means other than the traditional Internet. Wireless phones, televisions, handheld organizers, and pagers are just a few of the methods being worked on to increase convenience and profit sources (Salomon Smith Barney, 2001).
Networks. AOL Time Warner’s television networks make up 18% of the EBITDA for 2000. The key to increasing the networks revenue is to maintain and increase subscribers. The networks have signed deals to televise major events such as Wimbledon and NASCAR. The advertising for the networks will also be increased through AOL Internet position (Salomon Smith Barney, 2001).
Filmed Entertainment. Filmed Entertainment contributes 10% to the EBITDA for 2000. New technologies will drive the revenue in this area like it has successfully in the past. DVD, VOD, wireless applications, digital cinemas, and interactive television are some of the current technologies that are and will continue to be employed by AOL Time Warner to create greater revenue generating films (Salomon Smith Barney, 2001).
Publishing. AOL Time Warner’s publications made up for just fewer than 10% of the EBITDA for 2000. Not only will AOL be able to promote and advertise Time Inc.’s magazines online, but the magazines will also have a base to put their content on the Internet. More than 800,000 subscriptions have already resulted from online promotion. Also, Time Inc. is pushing “evergreen” subscriptions where there is no renewal necessary. Therefore, renewals are more likely and it is easier to raise prices (Salomon Smith Barney, 2001).
Music. Music is the smallest portion of the EBITDA for
2000 with 6%. There are four areas where AOL Time Warner will concentrate
to increase revenue from the music department. First, they need to
build up foreign markets. Second, more resources will be given to
artist genre development. Third, improvement of cost profile will
be done through restructuring. Fourth, in an effort to broaden the
audience, AOL Time Warner will take advantage of the power of their cross-promotional
tactics (Salomon Smith Barney, 2001).
Appendix C: Administrative Agencies Memo
TO:
Professor C. Michael Gray
FROM: Jennifer Crutchfield
DATE: February
27, 2001
SUBJECT: Administrative Law
Introduction
“The rise of administrative bodies has been the most significant legal trend of the last century, and perhaps more values today are affected by their decisions than those of all the courts, review of administrative decisions apart”, stated Justice Jackson, in 1952. There has been a dramatic increase in the number and activities of Federal boards, commissions, and other agencies. Administrative agencies create more legal rules and controversies than the legislatures and courts combined; therefore, it is important to have an understanding of these agencies. This is the memo you requested concerning administrative Law. This memo contains information on administrative agencies, their operations, and the limitations on these agencies.
Administrative Agencies
Administrative agencies are governmental entities, other than courts and legislatures, which have the authority to affect the rights of private parties through their operations. Administrative law is the branch of public law that is created by administrative agencies in the form of rules, regulations, and duties of those agencies. These agencies regulate important matters involving national safety, welfare, and convenience. There are administrative agencies at the Federal, State, and local levels. They relieve legislatures on the burden of dealing with every detail of a specific problem. Congress can create an agency by enacting enabling statutes. Agencies are specialized bodies staffed by individuals with expertise in the subject matter.
Operation of Administrative Agencies
Administrative agencies perform three basic functions that include rulemaking, enforcement, and adjudication. Administration process refers to the activities that agencies engage in while carrying out their powers.
Rule Making
Rule making is the process by which administrative agencies enact rules
of law. Once rules are established, they are related to all parties.
The rule making process also notifies all parties that the agency is considering
the rule, and also provides the opportunities for concerned individuals
to be heard. There are three types of rules that administrative agencies
can enact: legislative rules, interpretative rules, and procedural rules.
· Legislative Rules are rules that an agency issues that has
the force and effect of law if they are constitutional, within the power
granted to the agency by the legislature, and issued according to the proper
procedure.
· Interpretative Rules are agency issued statements that explain
how the agency construes its governing statue. These rules are exempt
from the APA’s procedural requirements of notice and comment. They
are not automatically binding on the parties the agency regulates or on
the courts; however, they are held with substantial weight.
· Procedural Rules establish rules of conduct for practice dealing
with the agency, identify an agency’s organization, and describe its method
of operation. These rules are also exempt fro the APA’s requirements
of notice and comment, and are not law.
Enforcement
Agencies can carry out the executive function of investigation to determine whether their rules and regulations have been violated. In order for an investigation to take place, the investigation must be authorized by law and performed for a legitimate reason, the demand for information must be sufficiently specific and not burdensome, and the information sought cannot be privileged.
Adjudication
After an investigation is performed, an agency can formally or informally resolve the matter. When solving informal disputes, agencies may use procedures that include advising, negotiating, and settling. The Administrative Dispute Resolution Act of 1990 encourages agencies the use other methods of resolution, which include mediation, conciliation, and arbitration.
The formal procedure in which an agency resolves a matter is called
adjudication, which involves finding facts, applying legal rules to the
facts, and formulating orders. The APA has established mandatory
standards, which are as follows:
· The agency must give notice of the investigation.
· The agency must give all interested parties the opportunity
to submit and consider the procedure.
· The hearing is presided over an administrative law judge and
is prosecuted by the agency.
· Either party may use oral and documentary evidence.
· All decisions must include a statement of findings of fact
and conclusions of law and reasons for them, as well as a statement of
the appropriate rule, order, sanction, or relief.
· An agency may impose sanctions if authorized by law and if
it’s within jurisdiction.
· If the order is appealed, the agency may decide the case de
novo.
Limits on Administrative Agencies
Judicial review
Judicial review is an important part of administrative law and extends
to administrative agencies. Judicial review is used to check
the constitutionality on particular rules or orders of an administrative
agency.
· General Requirements: Parties seeking to challenge an
agency must have standing and must have exhausted their administrative
remedies.
· Question of Law: When a question of law arises, the
court will determine whether the agency has exceeded its authority,
properly interpreted the applicable law, violated any constitutional provision,
or acted contrary to the procedural requirements of the law.
· Question of Fact: The courts use one of three different
standards when reviewing facts. The arbitrary and capricious
test requires the agency to have a rational basis for its decision.
Substantial evidence test require the agency to support its conclusions.
The court may also apply the unwarranted by the facts, which allows the
court to try the facts de novo.
Legislative Control
The legislature can exercise control over administrative agencies though a variety of methods. Through Congress’s budgetary power, it can limit or expand an agency’s operations. Congress can also amend an enabling statute, set guidelines for agencies, and reverse or change a rule. Each house of Congress has oversight committees to review agencies operations, and the Senate has the power of confirmation over high-level appointments. In addition, the Congressional Review Act of 1996 requires agencies to submit new rules to each house of Congress before they can take effect. Congress must have the opportunity to disapprove the rule if it is a major rule.
Control by Executive Branch
The President has significant control over administrative agencies within the executive branch. The President has the power to appoint agency chairs and to remove commissioners for statutorily defined causes. The President also has an extensive role in the budgeting of agencies, which enables him to have control over their policy and operations. The President can provide monies appropriated to an agency by Congress. Finally, the President can alter, combine, or abolish an agency if Congress does not disapprove within a certain amount of time.
Disclosure of Information
Congress has enacted discloser statutes to enhance public and political
knowledge of agency activities. Congress has enacted two discloser
statutes, The Freedom of Information Act and The Government in the Sunshine
Act.
· Freedom of Information Act gives public access to most of
the files of Federal administrative agencies. Agencies can deny access
to files that deal with the following: national defense or foreign
policy which has to be kept secret, internal personnel rules and practices,
records exempt by statute of disclosure, trade secrets and commercial or
financial information that is confidential, inter- or intra-agency memorandums,
personal and medical files that constitutes invasion of privacy, investigatory
records for law enforcement purposes, and certain geological and geophysical
information and data.
· Government in the Sunshine Act requires meetings of Federal
agencies to be open to the public. Agencies may close meeting that
pertain to the same grounds in which they can refuse discloser of records
under the Freedom of Information Act.
Appendix D: Speed Comparison
* (Barnes and Fienberg, 1997)
Comparative Speeds
Unlike traditional communication devices (modems and LAN connections)
that send and receive data at the same speed, many newer devices receive
data much faster than they can send it. Keep in mind, however, that while
cable modems can receive data at speeds up to 30 MBPS, your PC itself is
limited by its Ethernet interface, which theoretically reads data at 10
MBPS but is usually much slower. Also, the cable network may slow
down considerably if lots of people are logged on or if the cable company's
connection to the Internet is bogged down for some reason. (Barnes and
Fienberg, 1997)
* (Barnes and Fienberg, 1997)
Time to Download
How long will it take you to download the latest and greatest info?
At cable modem speeds (left side of the scale below), you can have a 3.5MB
file in about 1 second, assuming you have a clear connection and a computer
that can accept data that fast. On a 28.8-kbps modem (far right of the
scale), it'll take you more than 16 minutes, again assuming you have a
clean connection. (Barnes and Fienberg, 1997)
Appendix E: Technologies that can be Used in Road Runner*
Internet Access - Allows users to view web pages and complete downloads in a fraction of the time that dial-up services are capable of.
Multimedia - The increased bandwidth allows users to stream audio and video files without downloading.
IP Telephony - Allows cable operators to offer local and/or long distance telephone services using Internet Protocol.
MUD - Multi-user dimensions are structured social environments in which users are represented by an animated character Users can interact with anyone in the MUD with real-time chat and can play games or give lessons
Conferencing - Allows a group of users to communicate in real-time through the use of live streaming audio and video.
Webcasting - This allows users to have specific information, such as news and articles automatically sent to their computer.
Networks - The cable company can establish a virtual private network, similar to a local area network in which users in specific areas can share resources. This allows schools, government buildings, and companies to establish network connections to communicate without being in the same place.
Management - The cable system will allow public utilities to perform maintenance, troubleshooting, meter reading, and monitoring from a remote location.
Home Monitor - The always on broadband system will allow for security systems in homes to be directly linked with emergency services such as fire departments and police.
Karaoke - Allows users to engage in interactive karaoke programs with people around the word.
Telemedicine - Allows the medical community to transfer large files that can aid in providing diagnosis, treatment, consulting and education.
*(National Cable Television Center, 2001)
Appendix F: Distribution Map of Athens
* (U.S. Census Bureau)
The above map shows the three-mile radius that the DSL service can reach.
The center of the circle is Verizon’s Central Office. Residents outside
of the circle do not have access to Verizon’s DSL.
Appendix G: DSL Service Packages
For DSL service, an Internet user must pay his or her Internet Service
Provider and the local phone company, Verizon. The chart below details
each of the services provided by Verizon. The data rate discloses
the speeds of information transfer. Download is the speed at which
you receive, and upload is the speed at which you send. The chart
gives Verizon’s monthly service charge for DSL. This fee is in addition
to the user’s monthly phone bill.
DSL Platinum Plus ServiceFor Internet access in a multi-user environment,
such as a branch office, the ultimate package is Platinum Plus. With Platinum
Plus, you get connectivity to the Internet or a corporate network for multiple
residential PCs or small LANs. Data Rate: 1.5 MBPS download / 768 Kbps
upload Ideal Applications: Internet Access in a Multi-User Environment
such as a Small Branch Office Monthly Service Charge: $215.00 per month
with 1-Year Contract
DSL Platinum ServiceA step up from Gold, Platinum is perfect for a
number of users who access the Internet from a LAN. If your office or home
office requires large bandwidth to support Web site development, high-speed,
interactive access to the Internet and multimedia applications, Platinum
delivers. Data Rate: 1.5 MBPS download / 768 Kbps upload Ideal Applications:
Specialized Small Office / Home Office and Multimedia Applications That
Are Extremely Bandwidth Intensive / Small Office / Home Office Requiring
Large Bandwidth / Multimedia Intensive and Interactive Internet Access
Monthly Service Charge: $95.00 per month with 1-Year Contract
DSL Gold ServiceThe serious Internet user, home business or office
that leverages the power of the Internet might want to upgrade to our Gold
package. This package provides the speeds necessary to access media-rich
Web sites, support an Internet storefront, as well as one and two-way videoconferencing
and work-at-home applications. Data Rate: 768 Kbps download / 768 Kbps
upload Ideal Applications: Small Office / Home Office Internet Access and
Multimedia Applications Requiring High Bandwidth / Web Server Link / Video
On Demand Monthly Service Charge: $68.00 per month with 1-Year Contract
DSL Silver ServiceFor users who want a little more than the basics,
this package is a great option. Higher speeds give you quick access to
the Internet and the ability to run multimedia applications, like one-
or two-way videoconferencing. Data Rate: 384 Kbps download / 384 Kbps upload
Ideal Applications: Small Office / Home Office Internet Access and Multimedia
Applications Monthly Service Charge: $53.00 per month with 1-Year Contract
DSL Bronze Plus ServiceThis is our introductory package, designed for
the residential consumer who transmits large files and needs high-speed
access to their Internet service provider. Those who work from home can
also take advantage of DSL service for applications requiring a high bandwidth
connection to their corporate network. Data Rate: Up to 768 Kbps download
/ Up to 128 Kbps upload Ideal Applications: High-Speed Internet Access
Monthly Service Charge: $32.50 per month with 1-Year Contract
(Verizon Product & Service, 2001)
Appendix H: Current ISPs in Athens
DialNet
DialNet is an Internet service offered to Ohio University students, faculty and staff. It is provided by Communication Network Services (CNS) using a 56k modem, the user's telephone line, and a dial-up connection. According to Michelle Donaldson of CNS, the user is charged an hourly rate that varies between $1 and 25 cents with the time of day. This is a beneficial service for an individual whose use of the Internet is minimal (personal communication, March 2, 2001). Dial Net can be used to check e-mail and access the World Wide Web. It also offers access to Ohio University research services. Many of the research databases and online journals available on campus are also made available to the Dial Net user. For a student, faculty or staff member that has a high need for online research, this service would be advantageous. However, a drawback is that Dial Net is not offered to Athens residents that are not affiliated with Ohio University. Additionally, with the dial-up connection, the user cannot use the telephone and the Internet at the same time. The user must log-on each time that he or she wishes to be connected. CNS does offer technical support, but, unlike many other providers, it is not available at all hours of the day. CNS also offers a faster DSL connection for $58.50 per month. At this time, they are experiencing ordering problems with Verizon and are not currently taking any orders for this service (Communication Network Services, 2001).
FrogNet
FrogNet is a local Internet service that provides both Dial-up and DSL connections through the telephone line. They both cost $19.95 per month or as low as $16.58 per month, if you pay in advance. With FrogNet, the user can access the World Wide Web, listen to high quality audio, use a web cam for live video conference, download large files, and have multiple email addresses. The first month of use is free to the customer, and there is no sign-up fee. They also offer free domain hosting, which allows the user to create a personal web page with 10MB of space. FrogNet's office is located in Athens and offers free Internet classes to users in the area (FrogNet, 2001).
EurekaNet
EurekaNet is another Internet service available in Athens. They offer a standard dial-up service for $19.95 per month, or as low as $15.75 per month if paid in advance. They have also partnered up with Verizon to provide DSL service for $39.95 a month. With this, the user has unlimited Internet access and a connection that is always on. They offer the user three e-mail accounts, access to the World Wide Web,10 MB of personal web space, and technical support all the time (CoreComm, 2000).
Microsoft
MSN is another Internet Service Provider in Athens. For $21.95 per month and the first month free, they offer 56k dial-up unlimited access. MSN also has an hourly dial-up plan that costs $9.95 a month for a limited 20 hours of Internet use and $1.50 for each additional hour thereafter. MSN offers technical support at all times (MSN, 2001).
America Online
AOL has several different pricing plans. The first is a $21.95
per month plan, $19.95 if the user pays a year in advance that offers unlimited
access to AOL and the Internet with no hourly fees. For $4.95 per
month, a user can get three hours of AOL and the Internet and pay $2.50
for every additional hour. Similarly, one can pay $9.95 a month for
5 hours of AOL and the Internet and $2.95 for every hour of usage thereafter.
For individuals who already have an Internet connection, they can pay $9.95
for use of AOL features and access to the Internet (AOL Pricing Plans,
2000).
DragonNet
DragonNet is another ISP in Athens. They offer a dial-up service
for $18.75 a month for unlimited usage and no hourly charges.
Verizon
Verizon, the local telephone company, also provides a dial-up Internet
service in Athens. With the use of a telephone line and modem, Verizon
provides dial-up access at 56k speed for $19.95 a month. This includes
150 hours of Internet usage, with every hour thereafter costing $0.99 (Verizon
Online, 2001). Currently, they are offering a promotion in which
the first six months of usage are $16.95 each. Since Verizon is the
local phone company, a benefit of using their Internet service is that
the cost can just be added to the phone bill. According to a Verizon
telephone operator, this is favorable because the user will not have to
worry about paying an additional bill that he or she would get from another
Internet service (personal communication, February 28, 2001). They
also provide technical support at all times and have a satisfaction-guaranteed,
30-day, money-back guarantee.
Appendix I: Digital Cable Television
Features (AOL Time Warner Columbus, 2001)
§ More movies, music and sports.
§ More than 200 total channels.
§ Access to 38 Pay-Per-View channels.
§ 40 CD-quality Music Choice® channels
Pricing & Packages (AOL Time Warner Columbus, 2001)
BASIC SERVICE
Up to 26 channels $11.95*
STANDARD SERVICE
Up to 35 additional channels
Requires purchase of Basic Service $18.40
Premier Digital Package $10.25
Digital Access Package $4.30
Digital Variety Package $6.30
Digital Movie Package $8.25
PREMIUM SERVICES
One Premium $10.00
Two Premiums $19.00
Three Premiums $25.00
Four Premiums $28.00
Starz/Encore
With no other Premiums $9.95
With other Premiums $7.95
INSTALLATION CHARGES
New Connect $45.00
Reconnect $39.00
Appendix J: Road Runner
Features (AOL Time Warner Columbus, 2001)
§ Super-fast always-on Internet connection
§ Latest world news and exclusive local content
§ Secure, unlimited access with NO hourly charges
§ Convenient installation times
§ Multiple e-mail accounts
§ Motorola high-speed cable modem
§ Personalized homepage
§ 30-day money-back guarantee (excludes installation fees)
§ Customized Internet Explorer browser
Pricing (AOL Time Warner Columbus, 2001)
Time Warner Communications Cable Subscribers
§ Basic Road Runner Service: $39.95 per month
§ Additional IP Addresses: $9.95 per month
Time Warner Communications Non-Cable Subscribers
§ Basic Road Runner Service: $45.95 per month
§ Additional IP Addresses: $15.95 per month
Installation (charges are per trip)
§ PC Installation: $69.95
§ Cable Installation (waived for current Time Warner cable subscribers)
$30.00
§ Custom Cable Installation: $30.90 per hour
§ In-home PC Service Charge: $65.00 per hour
Network interface cards (if needed)
§ ISA Card $30.00 each
§ PCI Card $55.00 each
§ PCMCIA (laptop) Card $85.00 each
Appendix K: Acceptable Use Policy
Acceptable Use Policy (AOL Time Warner Cincinnati, 2001)
Road Runner seeks to create and foster an online community that can be used and enjoyed by all its members. To further that goal, Road Runner has developed an Acceptable Use Policy with standards for using the service. Although much of what is included here is common sense, Road Runner takes these issues very seriously, and will enforce these rules to ensure that an enjoyable environment is provided to all its subscribers.
Road Runner therefore reserves the right to remove any content posted to its system, which it deems offensive, inappropriate, or in violation of its policies. Road Runner also reserves the right to suspend or cancel a subscriber's account for engaging in inappropriate conduct. (Subscribers, of course, also remain legally responsible for any such conduct.)
In using Road Runner, subscribers accept the following restrictions, as well as those set forth in the Subscription Agreement, and agree to use the system only for lawful purposes. In addition, subscribers agree not to use or allow others to use Road Runner:
§ to post or transmit hate speech, threats of physical violence,
or harassing content
§ to post or transmit material in violation of copyright laws
§ to post or transmit content that is legally obscene or that
violates child pornography statutes; that contains graphic depictions of
sexual acts, or visual depictions of sexually explicit conduct involving
children; or that contains depictions of children, the primary appeal of
which is prurient
§ to post or transmit other sexually-oriented material that, in
the specific context, is offensive or inappropriate
§ to post or transmit commercial or bulk e-mail without the prior
written approval of Road Runner
§ to post or transmit off-topic or commercial messages on forums
or newsgroups
§ to engage in illegal, unlawful, or tortuous conduct or other
conduct that interferes with Road Runner's ability to provide service or
interferes with the rights of others. Such conduct includes, but is not
limited to: libel, invasion of privacy, consumer fraud, unauthorized dissemination
of trade secrets, violation of trademark laws, hacking, or transmittal
of commercially restricted information.
As described in more detail in the online Subscriber Privacy Notice, Road Runner may disclose certain subscriber information, unless you object, to certain commercial entities such as advertisers and direct mail or telemarketers. This information is limited to your name, address, and the particular services to which you subscribe.
In addition, you should be aware that in keeping with federal and state law, Road Runner, in response to court order or specified legal process or certain kinds of emergency governmental requests, may turn over other information such as the content of e-mail.
Copyright Information
Time Warner Cable's subscribers and account holders may not upload, post, transmit or otherwise make available on or via the Road Runner Service any material protected by copyright in a manner that infringes that copyright. In accord with the Digital Millennium Copyright Act, it is the policy of Time Warner Cable to terminate in appropriate circumstances the Road Runner Service of any subscriber or account holder who is a repeat infringe. However, as provided in the Road Runner Subscription Agreement, Time Warner Cable expressly reserves the right to terminate or suspend the service of any subscriber or account holder even for a single act of infringement. These policies do not affect any other rights Time Warner Cable may have under law or contract. If you believe that material has been uploaded, posted, transmitted or otherwise made available on or via the Road Runner Service in a manner that is not authorized by the copyright owner, its agent, or the law, please provide the following information to our copyright agent Christine Dzujna:
1) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed;
(2) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site;
(3) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit Time Warner Cable to locate the material;
(4) Information reasonably sufficient to permit Time Warner Cable to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted;
(5) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law; and
(6) A statement that the information in the notification is accurate,
and under penalty of perjury, that the complaining party is authorized
to act on behalf of the owner of an exclusive right that is allegedly infringed.
Appendix L: Survey Method
First, a committee determined six questions that would be appropriate to determine information that would assist in making recommendations. The questions were as follows:
1. Are you currently, or have you ever paid for an Internet provider?
2. Which Internet service do you use?
a. FrogNet
b. Eurekanet
c. DialNet (dial-up or DSL)
d. DragonNet (dial-up or DSL)
e. Verizon (dial-up or DSL)
f. AOL
g. Microsoft
h. Other ______________
i. Do not know
3. Are you satisfied with the current speed of your Internet
connection?
4. How much do you pay per month for your Internet service?
5. How much would you be willing to pay per month for a faster
service?
a. Greater than $50
b. $41-$50
c. $31-$40
d. $21-$30
e. Less than $20
6. Are you an off campus student, Athens non-student resident,
or a business?
The first question is a filter question to make sure that all who were surveyed were Internet subscribers. If the answer to that question was no, then the person was thanked and the surveyor moved on to the next person. If the answer was yes, then the surveyor continued on with the survey.
A systematic random sampling technique was used to determine the 200 people to be surveyed. This method was used to create a probability sample so that the results would statistically represent the population in question. Two phone books, the Athens phone book and the Ohio University directory, were used as a list of potential people to survey. Two random numbers, two and thirteen, were chosen from the table of random numbers to be used in the method. Eight teams divided up the phone books by taking 30 pages each. Each team used the first random number, two, as a starting person to survey, and then counted and surveyed every thirteenth person after that. If a person was not available or they answered the first question with a no, then the surveyor moved on to the next thirteenth. If a group came to the end of their section, then they would continue counting back at the beginning of their section.
The data was collected and compiled in Microsoft Excel. SPSS was
then used to analyze the data.
Appendix M: Survey Results
Four analyses were run on the data: frequency tests, descriptive
statistics, T-tests, and cross-tabs. These tests were used to determine
various characteristics of the population of Internet users in Athens.
Frequencies
A frequency test was run to determine the breakdown of who uses each Internet service provider, who is satisfied with the speed of their Internet, what people are willing to pay, and what category the person surveyed fell into.
Table 1: ISP’s
Table 1 breaks down how many people use each ISP and the percent of the market share that each ISP possesses. FrogNet has the most market share followed by AOL, and the rest hold anywhere from 0.5 percent to 8.5 percent of the market.
Table 2: Satisfaction
According to the above table, 45 percent of the people in Athens are
satisfied with their current Internet speed while 55 percent of the people
are not. Therefore, depending on what people are willing to pay,
almost half of the population is not happy with their service and might
want to upgrade to digital cable.
Table 3: Willing to Pay
The statistical majority of the people in Athens are willing to pay between $21 and $40 for a faster Internet service such as Road Runner. 27.5% are willing to more than $40, which is what Road Runner would cost. However, what the survey does not test for are households that would share the cost of the Internet service. Many off-campus students would share the cost with their roommates, and in some instances the shared cost would be less than $20.
Table 4: Type of Respondent
According to Table 4, 81.5 percent of the people surveyed were off-campus
students. 17 percent of the people were Athens residents who are
not students, and 1.5 percent were businesses. Since the amount of
businesses surveyed was so low, no conclusions representing Athens businesses
can be made.
Descriptive
Table 5: Pay per Month
As seen in the above table, 181 people out of the 200 surveyed knew
how much they paid per month for their Internet service. Of these
181 payments, $24.12 was the average, $9.95 was the lowest, and $60.00
was the highest.
T-tests
T-tests were run to see if there was a relationship between what Athens residents currently pay per month and their satisfaction, and what type of person they are. All of the tests were tested against a 0.05 alpha level. In each case the test was two-tailed.
Table 7: t-test for Satisfaction and Amount Paid per Month
Table 8: t-test for Equality of Means
It was found that the people who are satisfied with the current speed of their Internet are paying more, $27.10, on average than what people pay, $21.66, who are not satisfied. Therefore, it can be said that when people pay more for Internet they are more likely to be satisfied. This can be said because the p-value, 0.002, was less than the alpha value of 0.05, which means that the null hypothesis can be rejected and the means are not equal.
Table 9: t-test for Type of Resident and Amount Paid per Month
Table 10: t-test for Equality of Means
There is also a relationship between what kind of person someone is and how much he or she pays. Off-campus students pay more, $24.89, on average than Athens residents pay, $21.10. Therefore, off-campus students might be more likely to subscribe to the AOL Time Warner service. This is true because the p-value, 0.028, is less than the alpha value, 0.05, which means that the null hypothesis is rejected and the means are not equal.
Cross Tabs
The following analyses compare the ISP providers and the satisfaction of the surveyed and how much people are willing to pay and the type of resident that they are.
As shown in the above graph, the only two ISP’s that have more satisfied people than unsatisfied are DialNet DSL, Verizon DSL, and other. Therefore, since DSL is a high-speed Internet connection, it can be concluded that people will be satisfied with the speed of a cable connection.
As shown is Graph 2, residents vary almost evenly as to what they are
willing to pay. However, off-campus students are less likely to be
willing to pay in the high range as they are in the $21 to $40 range.
As stated previously, this survey does not take into account households
that would share the cost, such as off-campus students with roommates.
Businesses are willing to pay the most, but since so few businesses were
surveyed there cannot be any conclusions drawn about Athens businesses.