AT&T broadens Net strategy

After a wild week on the Internet, in which it announced partnerships with three major search and content sites, AT&T is promising more of the same to come.

The telecommunications giant cut deals with Lycos, Excite, and Infoseek, three sites that provide search and navigation services and are transforming themselves into "portals," or the start-up page that provides users with aggregated content and services.

AT&T said today that more deals were set to be announced in the coming weeks.

While there is revenue potential in subscription fees for the bundled online services, the real pot of gold for AT&T may be the exposure and marketing potential the deals will yield for its other telecommunication services.

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"AT&T is clearly going after the maximum number of eyeballs for selling their store of telecommuncations services, and they believe the Internet is a good place to sell them," said Peter Krasilovsky, Internet analyst with Arlen Communications. He added that AT&T was moving quickly to secure deals with as many portal sites as possible to shore up its defense against competitors MCI Communications and Sprint.

MCI announced an alliance with portal Yahoo in March for a Web-based online service. Sprint and other ISPs have deals with the Snap online service, owned by NEWS.COM publisher CNET.

Common to all the AT&T deals so far is that the telco will bundle Internet access with a cobranded start page from each portal site. In addition, the portal sites will gain a cobranded link to a number of AT&T services, including standard offerings such as long distance telephone service and new, Internet-based services such as voice-enabled chat.

Pricing for the services has not been announced, and could vary among the portals, according to AT&T.

AT&T already offers its own Internet access service under the WorldNet brand for a flat fee of $19.95 per month for up to 150 hours. Users are billed at 99 cents per hour after that.

What appears to distinguish these deals from those made between AT&T rivals MCI and Sprint and Internet content sites is that AT&T over the next few months will roll out its Internet communication services not only to subscribers of the portal packages, but also to any visitor to the portal Web sites, regardless of their Internet service provider.

The goal is to provide users with the broadest array of communications tools on the Internet, according to AT&T.

But the fact remains that the company is proposing to lure Internet users to its Excite-, Lycos-, or Infoseek-branded online service packages, while offering its Internet communications services for free on those Web sites. Though the company is keeping the financial details of the deals under wraps, the real point seems to be to gather as many users as it can, whether or not they're paying customers, in part to entice them into purchasing other AT&T offerings.

One such upcoming offering is Internet telephony, which the company announced in January. While IP telephony does not require that users be online or even have a computer, Internet users may be more likely to try it. AT&T will begin trials this quarter in three large U.S. markets for domestic long distance calls priced between 7 1/2 cents and 9 cents per minute.

Since launching its WorldNet access service early in 1996, AT&T has amassed more than 1 million members.

But analysts have long said that AT&T was not living up to its potential in aggregating its various communications services into a bundled solution that would simplify the buying process for consumers. With the portal deals, AT&T may be moving in that direction.

"The convenience of a single bill has always been very apparent," said Krasilovsky, who noted that RCN, which recently acquired ISP Erols, is bundling cable, phone, and Internet services.