[ih] AOL in perspective

[vinton cerf]

On Thu, Sep 4, 2025 at 9:37 AM David Sitman via Internet-history <
internet-history at elists.isoc.org> wrote:

> Daniele asked me to try to distribute this to the list because his attempt
> appears to have been unsuccessful.
>
> David
>
> -----Original Message-----
> From: Daniele Bovio [mailto:Bovio at aol.com]
> Sent: Wednesday, August 20, 2025 3:17 PM
> To: internet-history at elists.isoc.org
> Subject: [ih] AOL in perspective
>
> A couple of comments about AOL:
>
> I was hired by AOL in 1995 to build and manage the network operations for
> Europe, in order to allow the AOL-Bertelesmann joint venture to launch and
> operate AOL in UK, Germany and France. The first question I was asked by
> Suk S. Soo, ANS director, during my interview was: how do you make money on
> the Internet? Coming from the academic world as former Technical Director
> of the European Academic Research Network (EARN) and member of the EAT
> (EBONE Action Team) the group which designed and implemented the first
> pan-European Internet Backbone, you may imagine my answer was less than
> adequate, as for the first time I was confronted with the concept of a
> "commercial" Internet.
> As I quickly learned the AOL business model was to sell content/media to
> the residential market via a different mean than TV by allowing the
> households PCs to connect via the telephone network. The problem was that
> in 1995 there was no ISP in Europe yet able/interested to offer internet
> access to the residential market and so we had to build everything from
> scratch, i.e. a dial-up access network and transatlantic WAN circuits
> connecting to the US AOL data centers and, via ANS, to the US Internet.
> So, indeed, the main target of AOL was not to be an ISP, but becoming one
> was an essential component of its business plan, and therefore, given its
> popularity, AOL became quickly one of the largest ISPs in the US and in
> Europe.
>
> That the main target of AOL was not to be a pure ISP in the long run was
> clearly apparent when in 1998 AOL acquired CompuServe via a 3-parties
> agreement with WorldCom: AOL acquired the CompuServe subscribers and sold
> to WorldCom ANS and the entire CompuServe Network Services department.
>
The interesting thing about the above is that MCI did a deal in 1983 to
include all the CompuServe users in the MCI Mail system by building a mail
relay between MCI Mail and ConpuServe.

>
> Network being a fundamental pillar of its business however AOL kept
> in-house the management of all the network infrastructure in the US and
> Europe, so still acting as an ISP to its users, but the cost was huge,
> particularly for
> Europe: in 1998 AOL spent $37M for transatlantic circuits and was
> projecting an expenditure of $58M by Y2K. When in 1998 it became possible
> to file for and get an International Telecom Operator license, following
> the crumbling of the European Telecom monopolies and the first private
> transatlantic cables were built (Gemini, Atlantic Crossing) I proposed to
> the AOL management to file for a license so to be able to buy IRU
> (Indefeasible Right of Use) capacity on the Gemini cable. The answer was:
> Nope! AOL is a content provider, not a telecom operator, find another way
> to reduce the cost.
>
> As a matter of fact that AOL decision turned out to be beneficial to the
> entire European ISPs club, as I managed to figure out how to buy IRU
> capacity at wholesale prices by inventing the Capitalized Lease concept,
> i.e. coaxing telecom operators to lease IRUs capacity to AOL via 10-years
> pre-paid lease agreements, thus removing the need for AOL to become a Telco
> Operator, and reported about it to the RIPE meetings in 1999 and 2000,
> allowing several ISPs to take advantage of the concept ;-). If you are
> interested you can find one of my presentations about transatlantic
> capacity in the RIPE archives:
> https://ripe36.ripe.net/presentations/cables2k/sld001.html


nice hack!!!

>
>
> So in conclusion IMHO, although its mission was not to be a pure ISP, AOL
> turned out to be one, and provided a fundamental push for the development
> of the Internet in Europe.
>
> Daniele Bovio
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