AOL details European expansion plans, services

AOL Europe GmbH on Tuesday detailed new German services, its upcoming launch in the Spanish market, and other plans for expansion in Europe, where it faces entrenched competition from strong local and regional ISPs (Internet service providers).

While AOL Time Warner is king of the Internet and media hill in the US, the European arm of its flagship ISP brand, America Online, has not even entered some of the larger markets in Europe, including Spain and Italy.

AOL will launch a service limited to "Intel devices" in Spain in the fourth quarter, according to Michael Lynton, president of AOL International and acting chief executive officer of AOL Europe. Speaking at a press conference here two days before the start of the CeBIT trade show, Lynton said the Intel device would be an Internet appliance, similar to the Audrey, but did not offer specifics. He said that the service for the devices would be followed by expanded services, but did not give a timeframe. In Spain, AOL faces entrenched ISP Terra Lycos.

Meanwhile, Lynton said AOL has no specific timeframe for entering the Italian market, and has not yet identified partners in the country. AOL executives previously have said that AOL would enter the Italian market in 2001. Lynton said that AOL considers Italy to have a "large potential market, but PC penetration is not very great there." Nevertheless, Italy-based Tiscali SpA, with which AOL is likely to compete, is one of Europe's largest ISPs.

While acknowledging AOL faces strong local competition throughout Europe, Lynton said that the company has momentum, and noted that in the last 12 months AOL's subscriber base grew 40 percent to 4.6 million users -- about 2 million in Germany, over a million in the U.K., and "hundreds of thousands" of new subscribers who have joined up under a new flat-rate plan in France (interrupted when AOL servers could not handle the load).

In the wake of the merger with Time Warner, AOL now can leverage content from one of the largest media companies in the world, integrating interactive services, entertainment, and infrastructure, he said. AOL is "not so much a technology company as a marketing company completely focused on the consumer," said Lynton. While users of competing ISPs may use services for communications intermittently, AOL subscribers are more apt to repeatedly take advantage of interactive services and stay online longer, he said.

"We understand how to monetize this space better than anybody else," he said.

AOL's business model is more akin to that of a media company than to that of a telephone company, Lynton said. Its business is based on branding, a subscriber base that continually comes back to AOL interactive services, the scale of its subscriber base, and multiple revenue streams that include advertising. AOL's goal in Europe, Lynton said, is to become the number one ISP in its key markets, an important step in the company's plan to grow its international revenue to 50 percent of all revenue for the company in 10 years. Currently, its international revenue makes up about 20 percent of the company's total revenue.

In Germany, AOL's strongest market, AOL plans to re-launch its portal in the third quarter, with faster rendering of pages and a standardized login mask, announced Uwe Heddendorp, managing director of AOL Germany. Also in the quarter, AOL Germany will launch DSL (digital subscriber line) services using Deutsche Telekom AG and possibly other infrastructure providers, and mobile instant messaging (MIM), which will bring AOL Instant Messenger (AIM) functions to WAP-enabled mobile phones, via a WAP portal being launched this week at CeBIT.

Heddendorp said in its initial launch the MIM services will allow users to send messages via their WAP phones to AIM users, but that initially the MIM functions would be limited, since users would not have be able to have an AIM window continually displayed on screen.

Here at CeBIT this week, AOL Germany will be launching for the German market AOL 2.0 for the PalmOS, which lets users send and receive AIM messages and e-mail on their PalmOS-based organizers from Handspring and Palm.

AOL can be reached in Dulles, Viriginia, at +1-703-448-8700, or at