A New Broadband 'Day' for AOL — continued

However, AOL has since jumped into the fray to wrangle its own DSL deals with Baby Bells, and it struck a non-exclusive carriage deal with Comcast as part of the cable conglomerate's merger with AT&T Broadband. Counting its access deal with corporate sibling Time Warner Cable, analysts now peg AOL's access to current and potential broadband subscribers at around 40 percent of the available market.

How it plans to execute its strategy of closing sales on new broadband subscribers with exclusive content and discounted e-commerce offerings is one part of AOL's much-anticipated analyst briefing in New York Tuesday. But many consider it the most difficult leg of AOL's four-pronged approach to turning its fortunes around.

Outlined by AOL Chairman Steve Case last fall, they include a new approach to advertising and commerce, growth in the core dial-up service, and a profitable international division. Those three appear to be working as AOL recovers from a double whammy of technology and advertising recessions, compounded by accounting probes currently underway by federal regulators.

On the e-commerce leg, Miller, the former head of information services at USA Interactive, is in familiar territory. He has shepherded new services for incremental fees that target both the fast end and slow end of AOL's base, such as small business webhosting services for broadband subscribers and by-the-hour, pre-paid cards for attracting members to cheaper dial-up rates.

Other e-commerce features include taking a cut of tickets sold online through a partnership with Ticketmaster.com, and with personal listings via online dating Match.com. A new shopping service that will help small and medium e-tailing vendors liquidate excess inventory, much like eBay's increasingly popular business service, is expected to go live around the first of the year. Its small business webhosting services for broadband providers includes discounts on small business services from vendor partners such as Office Depot, Monster.com, Fortune, and Pitney Bowes.

AOL's expanded Broadband Radio@AOL music service may be free of banner ads but e-commerce opportunities are hard to miss. In addition to contextual links to AOL's music search database, Broadband Radio@AOL is pitching sales of CDs or concert tickets right from the Radio@AOL player as an artist's track plays.

Even more new incremental services and approaches are expected to be unveiled for both the broadband and narrowband subscribers. And still on the drawing table, but gaining urgency in the company's long-term plans, is its strategy for grabbing a piece of the fast-growing online gaming market.

Miller has also recruited a former e-commerce colleague from USA Interactive, Lisa Brown, to help brainstorm creative new marketing and advertising packages for customers as part of a reorganized interactive marketing division headed up by Robert Sherman. Plus, Vice Chairman Ted Leonsis, a seasoned vet from AOL's early, glory-filled days has returned to a active role in plotting AOL's path to recovery.

On the international leg of its strategy, the company continues to cut costs in European and Latin American markets, and has managed better growth in dial-up users than compared to the United States growth numbers.

AOL still has to contend with regulators probing how it accounted for advertising revenue during the dot-com boom days, and mushrooming lawsuits charging that AOL's barter deals during the tail end of the Internet bubble inflated its revenues and share price. Although recent surveys show an improving outlook for online ad spending in general, the company is still expecting a 5 percent dip in revenues for the year, and expects another drop during 2003.

For now, the ad outlook leaves AOL having to cut costs and grow e-commerce revenues, while stiff-arming lower-priced threats from competitors looking for a piece of its subscriber base. As AOL moves to leverage more of its corporate parent's vast trove of content—a key ingredient beyond music downloads that critics say is a missing link in the growth of high-speed access—a major strategy shift in its broadband strategy is about to become more prominent.

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