Wednesday, May 29, 2013

The Dial-up Dilemma

NetZero, AOL and EarthLink all face declining revenue due to their dial-up business. All 3 are also public, so they have to do something about that declining revenue to shore up the stock price.

Netzero and Juno are owned by United Online. ISP revenue dipped $2.2 million since last year. United Online also owns FTD Floral which it is spinning off. All moves to shore up stock.

AOl's only profitable division is the ISP!

"The company's only profitable business is its most troubled. The subscription business, mostly AOL's dial-up Internet service but also search ad revenue from such users, has been losing users for years as broadband has become cheaper and more prevalent....Its number of subscribers fell 15% in Q1 from the year-earlier quarter, about the same rate of decline as a year ago. Average revenue per subscriber rose 7%, however, so the unit's revenue fell 9% to $165.8 million, less than the 15% year-to-year decline in Q1 2012." [Investor's Business Daily]

"AOL's money-losing businesses include what AOL calls its brand group. This includes, its network of local news sites; blogging site Huffington Post; popular tech blogs TechCrunch and Engadget; and MapQuest." It would seem to me that AOL should have been able to figure out how to make online content profitable by now. Many acquisitions and the whole TW merger should have resulted in 510,000 ways that won't work by now.

EarthLink used its dial-up cash cow to re-invent itself (several times). AOL is using it to become a new media company - again. NetZero is just riding it out. NetZero has tried 3G/4G MVNO projects. No idea how that is going.

But a lot of companies are experimenting with Mobile Internet via MVNO.

Birch has a USB 3G card and a $10 service.

GLOBALINX started its mobi service off the Sprint network, too.

Dial-up was a highly profitable cash cow. DSL was not. MVNO is not.

UNE-P was highly profitable. UNE-P is dead now.

Cloud (Apps) is Layer 7. It's the next wave of profit. Companies will need a combination of services to be sticky and be successful. (Maybe layer 1 AND layer 7.)

What's next for you?

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