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RealTime IT News

AOL-Time Warner Needs To Get Done

Without a doubt, I've seen the most curious range of emotions from retail investors during this latest market correction. Whatever wild volatility high-tech stocks have dished out, my readers have never been at a loss for words to sound off in response to my analysis on a bevy of topics that affect Wall Street and Main Street alike. I'm tickled by a pair of trends that I see from the stack of love letters and hate mail that I get week in and week out investors absolutely love AOL and positively hate WIPO. And, it's the former of the two that I'd like to ponder for a moment.

It's no secret that I've never been a fan of America Online's takeover of Time Warner since news of the deal first broke wind. The stakes from this proposed mega-merger are far too high for mainstream consumers to accept the deal at face value. It deserves a triple-dose of scrutiny, and neither company's laundry list of empty promises should be taken lightly. My vocal opposition to the marriage has stirred up a veritable hornet's nest of angry investors who have an obvious vested interest in seeing this deal sealed with a kiss.

But a funny thing happened just last week as AOL's share price began to tumble to 52-week lows ahead of the ISP's earnings release. Investors began openly bad-mouthing the bellwether and filled my mailbox with words of praise for voicing my opposition to the Time Warner land-grab. Perhaps these readers were a silent majority I never had the pleasure of meeting before, or maybe the stock price's unprecedented fall left AOL ripe for criticism from sunshine patriots and smarting investors (a point I touched on last week). Whatever the reason, I hate to disappoint those sympathizers, but my stance toward the deal has softened somewhat.

During last year's irrational exuberance, the wellspring of abundant venture capital had no equal. Good ideas received funding at a breathtaking pace - some better than others. One benefit from the market's froth was that for every hundred failures, one truly great brainchild would likely see the light of day; and, the average time to market was easily cut in half. The heated rivalries between me-too start-ups proved to be a boon for the average consumer. One key innovation bearing mention that scrambled to market, fueled by Web enthusiasts' insatiable appetite for the information superhighway, was high-speed Internet access.

Since mid-April's high-tech wilting on the vine, we've witnessed a pessimistic sentiment that's infected nearly every facet of the Internet and technology in general. A byproduct of that pessimism and belt-tightening in the capital markets is that some innovation has started tapering and the time to market has slowed. That's also left the once-aggressive rollout of broadband Internet access stalled for many consumers. Fewer marketing dollars are being dog-eared to promote faster Net access, and the pace of costly upgrades to cable and phone networks have suffered.

Having Net access "always on" and surfing at DSL and cable speeds dramatically changes the way people use the Internet. But most consumers won't make the switch because high-speed access either isn't available in their area, costs too much, or they're simply apathetic to the prospect of broadband. Any way you slice it, that's the fault of the phone and cable companies. What consumers need is a broadband proponent that both truly understands the benefit of high-speed Internet access and has a vested interest in wiring a fat pipe to every connected household. See where I'm going with this?

A colleague of mine once appealed to me that love 'em or hate 'em - America Online bridges a crucial divide for those who aren't already Net savvy. I've asserted in the past that AOL is akin to the Internet with training wheels and at the end of the day, that's



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