Every local Internet Service

Provider in the world just went

belly-up.

It was bound to happen: anyone

who's started an ISP in the past

half decade knows that all it

takes to get started is a single

Linux box, a couple of modems,

and an upstream Internet

connection. What was to keep Ma

Bell outta the act?

Last week, AT&T announced

WorldNet, its Internet dial tone

service for the masses. Sporting

200 local points of presence and

1-800 number access, WorldNet is

scheduled to become available

across the U.S. 14 March, with

special discounts to AT&T's 90

million customers.

Now, many would claim that AT&T

doesn't "get it." They didn't

get the personal computer

market, they didn't get Unix,

and the only thing they got when

they bought the Interchange

network from Ziff-Davis was

reamed to the tune of $50

million. But AT&T does seem to

get the one basic rule of the

net that's so crazy it takes an

AT&T VP to do the math: whatever

you're trying to sell on the

net, the only way to make money

is to give the product or

service away for free.

After all, MCI's already in the

Internet connectivity game with

its internetMCI service, which

offers five "free" hours of

service for a monthly $9.95 fee -

the same deal as you get with

AOL. All AT&T did was put the

"free" into free, and offered

its five free hours of service a

month for, well, free, to its 90

million customers. Additional

hours are $2.50, and, in a nod

to CompuServe's SpryNet,

unlimited access is available

for a flat fee of $19.95.

Where does AT&T get its cut? As

with its no-annual-fee Universal

Card, AT&T could be going after

a percentage of every business

transaction with its

announcement that online

purchases using the Universal

Card are protected from

unauthorized use - nevermind

that any credit card company

that wants to keep your business

wouldn't hold you liable for the

$50 maximum allowed for a

fraudulent transaction. Then

again, the five free hours could

be seen as classic

bait-and-switch. The flat rate

starts to look attractive after

the net newbie bumps up her

usage to about two hours a week -

which isn't a lot of time on a

14.4K or 28.8K modem. Or it

could just be a value-added for

the customers of AT&T's long

distance service, since the

pricing is higher for

non-customers - Internet

connectivity becomes the

frequent flyer miles to keep you

from switching to another long

distance company.

Local ISPs are quick to claim

that what differentiates

existing ISPs from AT&T WorldNet

is support: the friendly

operator who punches in your

calling card number when you're

on a rotary phone and drones

"Thank you for using AT&T" may

not know how to edit your .ini

file. The ISPs have a point:

AT&T might have difficulty

staffing its 24/7 support lines

with knowledgeable technicians

until it puts enough ISPs out of

business to give it a sufficient

talent pool to skim. And it

might be a little easier to

support the Macintosh and

Windows 95 if and when AT&T

ships WorldNet software that

runs on those platforms. Though

AT&T will distribute an

AT&T-branded version of the

decidedly cross-platform

Netscape with WorldNet, it's put

off support for Windows 95

(which comes out-of-the-box with

PPP) and the Mac until several

months after the service's

launch. Missing from AT&T's

software bundle is Internet

Phone, but the long distance

provider probably expects most

users to have already downloaded

the software which will allow

them to pay AT&T 20 bucks a

month for unlimited long

distance.

If WorldNet does lure the next

bunch of unsuspecting Hotel

Californians to the net, they'll

find their home pages set to the

WorldNet top page, a

paint-by-numbers version of an

online service. AT&T went all

out, partnering with McKinley to

provide the 10 cents-a-word

Magellan reviews; with Verity,

for its unremarkable search

engine; and with Harley Hahn,

author of fourteen tech titles

(including our favorite bedtime

classic, Assembler Inside &

Out), who will provide exclusive

net tours for WorldNet. If

enough people buy into WorldNet,

there will be much rejoicing in

Mudville, as content providers,

desperate for ad revenue (since

all information wants to be

"free" - see above) watch their

click rates double or triple as

the masses look for any way to

flee from the likes of Hahn's

Geeks R Us.

Whatever the numbers over the

next six months, though,

WorldNet is a win-win scenario

for AT&T: if they're able to

provide a good service that

satisfies customer expectations -

dial-up Internet connectivity

that's as cheap, easy, and

reliable as basic telephone

service - the company captures a

significant portion of the

market and drives out the

competition. If, on the other

hand, AT&T fucks up - if the

service can't adequately service

peak times, or if the support

lines are always busy - the

company ends up alienating a

good portion of the newbies it

hopes to target. First-time

users will undoubtedly conclude

that all the net.hype is much

ado about nothing, and go back

to watching Married With

Children reruns for a few more

years before giving the net

another shot. By causing a

significant portion of the

market to become disaffected

with the online experience, AT&T

can, once again, drive out the

competition.

It's a clever strategy, and might

just give AT&T enough time to

come up with something better

than 28.8 kilobit modems to

compete with the likes of TCI's

10 megabit cable-modem-based

@Home Network, to debut "in

1996." Have you ever not given a

damn about 28.8K net access,

either free or flat rate? You

will.