AOL execs see broadband as crucial for future

Admitting that AOL needs reworking, Jonathan Miller, the online service’s chairman and CEO, today told about 1000 investors and analysts convened in New York City about a series of steps the company will take to reinvigorate its l35 million subscriber business.

AOL, Miller said, “is a business in transition.” A little more than 100 days into the job, Miller said he realizes that while dial-up narrowband connectivity “is not going away,” AOL must move forcefully into broadband and wireless connectivity.

“Going into 2003, it looks like broadband use will be 5 times its level of 2000, with penetration expected to near 25 million U.S. households by year’s end,” Miller said. Additionally, “wireless has the potential to create new competition and fragmentation.”

The three methods, he said, form a “multi-band world [that] creates major challenges." In order to compete, Miller said AOL would need to rethink its broadband strategy, including how it works with both cable and DSL providers, the products and services that it offers, and how those products and services are marketed.

While AOL has a “phenomenal set of assets,” including being profitable with a strong brand name, the company’s internal and external directions have been askance since its merger with content and programming giant Time Warner.

“We’ve largely missed the first wave of broadband,” Miller said. “We have gained a reputation as a less-than-optimal partner. And with three different CEOs in the last few years, the organization has lost its keen focus of where it needed to go.”

That focus, he said, is being sharpened into the following steps that the company will pursue in 2003:

-- Continue to drive narrowband profitability.

-- Manage migration of members from dial-up to multi-band.

-- Grow non-subscription and premium services revenues.

-- Establish international profitability.

AOL Time Warner CEO Dick Parsons threw the support of the entire organization behind these measures.

“This is not a wasting business,” he said, adding that AOL “is going to be the growth driver for all the AOL Time Warner businesses.”

To do this, he said, the media giant will “work across the entire array of all of our businesses [including Time, Inc., CNN, HBO and the WB Network] and create an online product offering that is so compelling that online consumers simply can’t live without it.”