Internet-portal company Snap last week took a key step
toward encouraging the type of media-rich content that is sure to fuel competition against
cable in the residential data market.
While such content benefits cable by providing
high-speed-data customers with access to ever more sources of enhanced material,
Snap's move was primarily focused on the growing opportunity that DSL
(digital-subscriber-line) penetration into the consumer sector offers to portals and other
content distributors.
"Our plans have accelerated with the growing
commitment of ISPs [Internet-service providers] and telcos to rolling out DSL," said
Edmond Sanctis, chief operating officer at Snap, a joint venture of NBC and CNET.
Along with pulling together a broad base of content
suppliers committed to supplying video and other media developed specifically for
high-speed access, Snap has developed customized user interfaces as the first point of
portal entry for customers to DSL services offered by a large number of service providers.
Those include Bell Atlantic Corp.'s Bell Atlantic
Internet Solutions, SBC Communications Inc.'s SBC Internet Services, GTE Corp.'s
GTE Internetworking and others from the carrier side, as well as a wide range of regional
and national ISPs.
"These providers have convinced us that they're
serious about getting DSL into the residential market, as well as the business
market," Sanctis said. "Bell Atlantic, for example, has been very aggressive,
and SBC plans to have DSL connections in front of 8.5 million households by the end of
'99."
Snap's high-speed-access site, which launched last
week, starts out with content from some 30 suppliers.
These including Snap's owners' sites -- like NBC
video-streaming portal VideoSeeker, CNBC/Dow Jones Business Video and CNET InterVU -- as
well as a number of big-name third-party destinations, such as A&E Television
Networks' HistoryChannel.com, Bloomberg L.P., SonicNet Inc., Sony Corp.'s Sony
Online Entertainment, Rolling Stone Network, Real Networks Inc.'s Film.com and Quokka
Sports.
Snap is well positioned to add specialized content because
it was built on a modular software architecture that it calls "Lens" from the
start of its operations, Sanctis said.
Users access the enhanced content site either directly in
instances where Snap is providing the user interface to DSL-service providers, or by
clicking on a high-speed users' icon when they enter its main portal site from other
service-provider interfaces.
The Snap enhanced portal elements are not pushing the
high-speed envelope, setting the threshold access speed for users at just 112 kilobits per
second, Sanctis noted. But he said the modular design will support moves to higher
thresholds as market condition warrant.
As the first noncable portal to take the plunge into
high-speed-specific content, Snap recognizes that the residential side of the equation is
at a mere beginning point, Sanctis said. But he noted that some 14 million business users
are already connected to T-1 (1.5-megabit-per-second) or fractional T-1 data-access links.
"We'd rather be ahead of the Internet curve than
behind it," Sanctis said. "We're leading now, but we recognize that this is
the evolutionary direction for everyone."
The significance of support like what Snap can provide to
ISPs in the DSL space can be seen in the plans of one of its ISP partners, Flashcom Inc.,
which bills itself as the largest supplier devoted exclusively to delivering services over
DSL.
Flashcom -- which is now in 18 major markets on the West
and East Coasts, as well as in Illinois, Michigan and Texas -- started out a year ago with
the business community as its primary target, using DSL facilities supplied by CLECs
NorthPoint Communications and Covad Communications Co.
But it has now embraced the residential sector as a major
opportunity, as well, Flashcom spokeswoman Anita Messier said.
"The growing availability of a consumer-grade DSL
service offered through the RBOCs [regional Bell operating companies] has affected our
strategies," Messier said. "The consumer response has been strong -- we're
well past the early adopter stage."
Flashcom offers a uniform residential service across all of
its markets, priced at $59.95 per month for service delivered at 384 kbps downstream and
128 kbps upstream. While higher than the price of cable-data services by $10 to $20 per
month, the Flashcom price has proven to be a "sweet spot" for generating
consumer demand, Messier said.
Because DSL delivers data service over the same line
that's used for voice service, consumers don't have to pay for second lines --
which, together with the ISP service, typically brings the cost of much slower dial-up
Internet service to about $45 per month, she noted.
From the content supplier's perspective, investment in
content tailored specifically to high-speed access is a matter of overcoming the
chicken-and-egg issue, but it makes sense now that the market base is beginning to grow in
DSL, as well as in cable, said Tom Heymann, vice president of enterprises at A&E.
"We saw the Snap strategy as a really neat opportunity
to derive benefits from the growing penetration of high-speed service," he added.
But A&E -- which is supplying an audio/video-clip
version of its This Day in History feature on The History Channel's site -- is
moving incrementally into the high-speed space without committing large sums at this
point, Heymann said.
"We think that the future is going to be broadband, so
we're keeping a close eye on it, and we know that the spending requirements will
change," he added.
Already, in the dial-up domain, the level of traffic and
business at A&E's various Web sites -- including ones devoted to its flagship
subject, A&E Network's Biography, and those for other components in the
company's network portfolio -- has been much greater than anticipated, Heymann said.
"Advertising revenues and online merchandise sales have far outstripped our
projections," he noted.
A&E's evolution on the Internet mirrors the way
that entities everywhere are exploiting the technology, replicating within their own
subject areas the same types of features that larger aggregators such as Snap employ.
For example, A&E has built what it describes as the
best search resource for information on history, providing users with a way to get data
that are specific to their needs, without calling up the reams of superfluous information
that typically occur in the search process.
Similarly, Snap, working with software supplier Inktomi
Corp., has developed what it describes as the largest rich-media directory in the world,
providing listings of sites in more than 300 categories that extend users' access to
high-speed-enhanced content well beyond the cluster of content aggregated by the portal
and its content partners.
"We don't just supply lists: We integrate some of
the content into the search results to give people an idea of what the sites have to
offer," Sanctis said.
Snap has gained a strong base in the emerging
broadband-portal sector, moving ahead of its bigger rivals such as Yahoo! Inc., Lycos Inc.
and Excite Inc., as well as hybrid portal-service providers such as America Online Inc.
and Microsoft Corp.'s Explorer start-up page.
An interesting question will be the extent to which the
portals -- with the flexibility to partner with an army of service providers -- are in a
better position to exploit the broadband potential than the hybrids, which can only reach
people who use them as service providers.
Sources said Microsoft is preparing to experiment with a
high-speed version of its Explorer site in a test over the broadband network of an unnamed
carrier. And AOL -- which is currently in DSL pacts with Bell Atlantic and SBC -- has
stressed that it is preparing broadband-specific content, as well.
For these entities, and for cable-service providers like
@Home Network and Road Runner, the rush to broadband content that is sure to follow the
Snap initiative represents a clear competitive challenge to their ability to capture
advertising and e-commerce revenues on the content side.
But it also clearly benefits any providers that hope to
sell customers on the value of high-speed connections.
