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AOL names head of new wireless unit

The online giant appoints a former chairman of the Federal Communications Commission, Dennis Patrick, to head its newly created wireless division.

America Online has appointed a former chairman of the Federal Communications Commission to head a newly created wireless division.

The online giant has named Dennis Patrick as president of AOL Wireless. The new division will focus on developing interactive services for wireless devices--such as cell phones and personal digital assistants (PDAs)--and on striking partnerships with other technology providers to carry these services.

Patrick served as chief executive of Doeg Hill Ventures, a venture capital firm that focused on wireless telecommunications, before the appointment.

"Dennis' extensive and wide-ranging experience in building telecommunications and wireless businesses will help us achieve our goal of making America Online the leader in wireless interactive services," AOL president Bob Pittman said in a statement.

Patrick will report to Pittman.

The appointment is not surprising, according to analysts. That's because the wireless market is expected to explode in popularity among Net users around the world. According to market research firm The Yankee Group, there will be more than 1 billion mobile phone users by 2003, 60 percent of whom will be capable of receiving Internet content.

The expected size of the market has sent many major Internet players into a scramble. Heavyweights such as AOL, Yahoo, Microsoft's MSN and Excite@Home have invested considerable time and money to get their services in the hands of cell phone, pager and PDA users.

Net companies view wireless access as a way to expand their services to consumers. These companies believe that consumers will remain loyal if they can access their email or send an instant message on any device, be it a PC, cell phone or television. This is especially crucial for companies trying to stake out territory in a market where competitors are just one click away.

Although wireless Net access is not as widespread as PC access, Net giants are not sitting on their hands. In fact, a battle may be brewing for wireless dominance.

In June last year, AOL announced it would allow its subscribers to send and receive email from their accounts to the popular Palm handhelds. And in October, AOL and Motorola inked a deal to put the popular AOL Instant Messenger on Motorola's advanced wireless communications devices.

That same month, Yahoo acquired Online Anywhere for $80 million in stock. Online Anywhere develops technology that reformats and delivers Web pages to non-PC devices.

Meanwhile, Excite@Home last week joined the WAP (wireless application protocol) forum--a wireless standards organization--and struck a deal with Vodafone to deliver content to mobile phones in Britain.

And Microsoft's MSN Mobile 2.0, a wireless version of its Web portal, is expected to launch during the cellular industry's annual trade show in two weeks.

E-commerce companies may not be far behind. Just this week Ticketmaster Online-CitySearch announced the formation of a wireless unit that will offer online ticketing on PDAs and cell phones.

The rush to develop a wireless strategy makes sense, but not to the level of zealousness expressed among these players, according to Rich Luhr, director of technology strategy at wireless consulting firm Herschel Shosteck Associates.

"These guys have been reading about the size of (the wireless market) and salivating," he said. "They're viewing wireless as a way to extend their LAN line dominance."

But in reality, Luhr added, wireless Net access is limiting. Because Web surfing remains difficult on a device such as a cell phone, wireless strategies will only keep existing users on their services longer. They won't necessarily be a way to cultivate new users.

The opportunity is "not to extend the service itself, but to stay in front of the customer," Luhr said.

For AOL, the creation of a wireless unit also puts more focus on its non-PC device strategy, which it has named "AOL Anywhere," Luhr said.

News.com's Corey Grice and John Borland contributed to this report.