If I were investing shares I’d be keeping away from companies currently being destroyed by IT technology. I’m thinking specifically of Royal Mail (nemesis: email), HMV (nemesis: iTunes) and BT (nemesis: VOIP). So given that the Time Warner AOL merger was perhaps the most miscalculated conjoining of all time it doesn’t surprise me in the slightest that the latter has entered the UK telco sector.
£50m will be ploughed into this disappearing market giving AOL access to 300 exchanges or around 20 per cent of UK households. If successful, a further £70m will be ploughed in by sugar daddy Time Warner to extend this to 1,000 exchanges covering over half the homes. An alternative telephone service will be the first product on offer with ADSL2+ Internet access and television on demand to follow.
Karen Thomson, big cheese of AOL UK, stepped forward to try and convince us AOL isn’t rubbish, “We finally have the opportunity to bring large-scale competition into the UK's national telephone network. This will drive innovation and efficiency in the market, which I believe will result in consumers benefiting from greater choice, better value and new kinds of digital services.” Fair enough, but clearly no one told her AOL sucks and all those CDs it chucks endlessly through our doors end up as beer coasters, at best.
Despite this, beta testing is well underway at the London exchanges of Battersea and Ealing (where AOL CDs are doing a rip roaring trade in coasters, novelty medallions, Frisbees and community recycling). Undeterred AOL tells us that its 1.1m UK customers spent more than two billion hours connected to the Internet last year, though it declined to mention whether 1.999bn of these came from free trials.
Of course any company that aims to make life uncomfortable for BT should be applauded; the only difference in this case is that it is akin to Sauron making a leadership challenge to Voldemort.