Kiwis keep eye on AOL's Australian venture

America Online will not move into this country for some time, if at all, but some New Zealanders are still watching the Internet service giant's progress in Australia with keen interest. AOL announced its plans for America Online Australia in October last year, and will launch later this year. The operation has yet to name a CEO, and spokesperson Lin Cameron says it will not reveal details of its pricing model until shortly before it launches. Nick Wood, director of the Internet Group, which has a growing retail and wholesale business in Australia, says he expects AOL to launch with a flat-rate plan.

America Online will not move into this country for some time, if at all, but some New Zealanders are still watching the Internet service giant's progress in Australia with keen interest.

AOL announced its plans for America Online Australia in October last year, and will launch later this year. The operation has yet to name a CEO, and spokesperson Lin Cameron says it will not reveal details of its pricing model until shortly before it launches.

Access prices of up to $A5 an hour are still common in the Australian consumer ISP market, and AOL must regard that sort of return as juicy, especially in comparison to the $US19.95 monthly flat rate which has caused it so many problems in the US.

Nick Wood, director of the Internet Group, which has a growing retail and wholesale business in Australia, says he expects AOL to launch with a flat-rate plan, "but I don't think they'll pitch it at $19.95 a month. Their access costs are much higher running a service in Australia than they are in America. I think they'll be competitive but not stupid, and that they'll launch somewhere around $29.95."

That's still below the Internet Group's Australian flat rate, but Wood says his company could "easily" match such a figure, "even if we don't make any profit and just add customers for a while. They couldn't sustain that sort of pricing for ever in Australia. And we're well and truly past the point of being screwed with."

Bryan Rowe, the former Xtra marketing manager who followed his former boss Chris Tyler to the Australian corporate ISP Access One, then went with the company when it was sold to OzEmail (where the basic rate is $5 an hour) says AOL will "chuck buckets of money" at marketing its new venture.

"You won't be able to get on a plane, open a magazine or go into a PC shop without seeing an AOL CD. You buy music CDs in America now and they've got AOL software on them.

"I can only assume AOL have done research that shows the market is big enough," says Rowe. "Their business model is not dependent on them having to generate the profitability from Internet access. It's very much an online trading model where they're effectively moving to become more and more of an electronic direct marketing organisation.

"As a member of AOL, you will receive a lot of unsolicited email inviting you to join certain services and to purchase certain products. So they very heavily use the push model. I'd expect down at this end of the world, as a part of the signing-up process, you would have to go through and give your permission to receive that sort of mail."

Cameron says AOL is expecting the bulk of its revenue to come from access and membership fees ,"as opposed to advertising and e-commerce, which are just starting to grow in the Australian market. But as online advertising develops in the Australian market, we hope to get our fair share of it."

She says AOL Australia will be "looking for the consumer with a high household demographic, similar to the States and our other global operations, and we're really going after the mass market. So it's people who are using the Internet or who intend to use the Internet at home - for information, entertainment and education for their children.

"A lot of it is our one-stop product offering, where we're providing more than access," says Cameron. "We're providing access and customer care on the back end with really good customer service. We're providing content that's packaged up in an easy to use and simple format."

Cameron says subscribers will not receive unsolicited mail from AOL itself, " but I would admit that AOL members are targets from spam email companies, because our audience is so attractive for direct email mass-marketing. AOL is very aggressive over that and we have in the States brought lawsuits against some of the people who are causing spamming problems, especially for those members who are not interested in receiving those junk emails. Hopefully we'll make some progress on that."

The company is advertising vacancies on its Website, and expects to have 50 staff, most of them in customer support roles, by launch day. And what of plans for this side of the Tasman?

"New Zealand is a unique market, in and of itself," she says, diplomatically. "So I think what we're doing is focusing on one thing at a time and our goal is to walk before we run. So we'll get Australia up and running and then review our plans for New Zealand to see if there's an opportunity for us to participate there."

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