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With America Online’s Growth Comes Glitches

While America Online has had good news to report lately – subscriptions to the service passed the 2 million mark, an increasing number of entertainment and information companies offer forums on AOL and the service recently announced a joint venture with Bertelsmann for a European launch – that growth hasn’t been trouble-free.

According to a March letter to AOL subscribers, company CEO Steve Case said the service has experienced problems with delayed electronic mail, network access problems and delays in the Internet interface upgrade. Case said the E-mail delays were a result of a huge increase in usage, “from 70,000 messages per day a year ago, to more than 1.5 million E-mails per day now.” The delays were particularly severe in the first two weeks of February, he added. On Feb. 14, AOL installed new system software, which Case said appears to have solved the problem.

In order to eliminate network access difficulties, a problem in some parts of the country, AOL is pushing to bring higher speeds, and now offers access at 14.4 kilobits-per-second (Kbps) in nearly every city that offers 9.6 Kbps access.

AOL is now testing 28.8 Kbps access through its own network, AOLnet. Case said development of a browser for the World Wide Web has been completed, and is now in internal alpha testing, with broader beta testing later this month. He said Web access is likely in May, a delay from the originally announced start-up date of March.

The letter went on to say: “A number of you might be familiar with Web browsers that run as applications separate from your regular communications software or online service. We thought a better approach would be to fully integrate Web access into AOL, so you can seamlessly access America Online content and ‘surf’ the Web at the same time. We wanted to be able to organize AOL based on topics of interest (so, for example, all sports content would be in one place, irrespective of whether the data is stored on AOL’s computers or Web servers), rather than organizing the service based on the underlying technology and thus fragmenting the offering.”

All that has taken more time than AOL planned, said Case.

The company also is addressing the upcoming debut of Microsoft’s competing online service. AOL president Ted Leonsis, in what was billed as a “cyber-keynote speech” to journalist, analysts and Harvard Business School students, outlined the company’s perspective on the future of emerging media. In the speech, an interactive TV broadcast titled “Seven Things They Don’t Teach You at Harvard Business School About New Media,” Leonsis said most progress in the area of new media will not come from a “convergence” of large corporate interests – as many people now believe – but from “smaller, entrepreneurial companies.”

In pointed remarks about Microsoft, Leonsis said he is personally offended by the “presumption” that Microsoft Network will win out over other online contenders.

“I believe Microsoft is creating a ‘private Internet,'” he maintained. He characterized Microsoft’s planned service as “proprietary and exclusive.”

The term itself, “Microsoft Network,” signifies that it belongs to the software giant, Leonsis said. On the other hand, he noted, “AOL is yours. I just can’t see teenagers walking around with T-shirts that say, ‘The Microsoft Network.'”

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