Titan Of Technology

09/08/1997

Steve Case, the man who founded the internet giant America Online, talks to Eric Ellis about a difficult year, a promising future and his interest in Australia.

STEVE Case was beaming as Bill Clinton's Ambassador for the Internet, Ira Magaziner, waxed lyrical on the President's vision of the online future.

"When the President asked me to take this brief, I found the most appropriate historical analogy to what is happening today was...the Industrial Revolution," Magaziner proclaimed grandly to the crowded room at the Washington Hilton.

 "And what we learnt from that era was that countries slow to adapt fell behind, while others with the vision to grasp the social and economic opportunities...(established) an era of properity and leadership that continues to this day."

Case, seated in the audience, nodded in total agreement. The event was the launch of President Clinton's commitment to promote the internet and its commercial potential by forswearing any internet-specific taxes.

If Magaziner is the policy-making mind behind the Clinton push for an online future, it is Steve Case, not yet 40 and already a multi-millionaire, who stands perhaps tallest among the people who will actually take us there.

Perhaps it is convenient therefore that America Online, the world's biggest Internet provider founded by Case more than a decade ago, is based close to the White House, just outside Washington D.C. 

"Just a co-incidence," Case told the AFR in a rare interview last week, "it' not essential but it's become increasingly helpful. Every week or two I'm meeting with somebody from Washington or the White House to talk about these issues. Bill Clinton has been very good for the Internet but what it needs is a concerted bipartisan effort to build the industry and realise its full potential."

"The President has been dead-on in seeing and developing the Internet with a market-driven policy."

America Online was founded in the early 1980s by the then 27-year-old Case, inspired, he said, by the science fiction writer Alvin Toffler's `The Third Wave.' It has since almost single-handedly shaped the way Americans view the Internet.

Some 15 per cent of US households are connected to the Internet and more than 70 per cent have done so with America Online, a `community' of almost nine million subscribers. Indeed, AOL is far and away the world's biggest provider of online facilities and has about 10 per cent of the global market, mostly on its US base.

AOL has aggressively sold itself as an `Everyman' Internet provider, with a heavy emphasis on domestic and family subscription and Case is a vigorous supporter of de-mystifying the Internet for it to progress to the corporate mainstream.

AOL went public in 1992 and despite a dearth of profits for what analysts still see as a young `start-up' business, AOL has a market capitalisation approaching $US6 billion.

Case has had his busiest year, not only trying to develop America Online. Much of the year has been spent in costly and continuing discussions with lawyers fighting class actions and legal suits that for awhile threatened to sink the group.

Those actions have made Case probably the most widely-published writer in the United States.

Just about every day, often several times a day, Case's often desperate scribblings can be, and often are, read by more than eight million-plus Americans, AOL's subscriber base. This mass of middleclass net surfers have made Case one of the richest men in the US, simultaneously turning him into one of the world's `Top Ten Titans of Technology.'

As founder-chairman of the world's biggest Internet provider, which boasts by some estimates as many as 20 per cent of the virtual world's subscribers, Case has more readers than any newspaper and more viewers than any commercial television station.

Such is his clout, commercially and societally, that Vanity Fair magazine now includes Case in its annual parade of the `New Establishment,' the modern media luminaries who shape the way we read, watch, think and live. And he's not yet 40; younger even than Bill Gates.

Usually it's Case explaining the seemingly limitless possibilities of the Internet and how to use America Online - with his return e-mail address. "I get tens of thousands of e-mails every day. I return as many as I can," he says.

But this year Case has also been the subject of a mountain of complaint because he promised something he could not deliver: unlimited access when AOL switched from a pay-for-use tariff to an "all-you-can-eat" flat fee.

The switch caused turmoil. Instead of paying for the time spent online, AOL subscribers can stay online forever if they like and theycan do it with a local call from just about anywhere in the world.

That has led to massively clogged telephone lines in many places. The average time spent on a line rockets in some places, such as the Silicon Valley, from five minutes to as many as twenty. AOL struggled to meet demand and in offices, bars and cafes around the US, Case's ever-smiling image was dotted with pockmarks from darts.

Several permanent AOL hate pages have been established, one detailing the colossal windfalls Case and fellow AOL executives and directors, including former US Secretary of State Al Haig, have had cashing in millions of share options, sometimes before AOL share price has headed south.

The cruellest blow in what amounted to a war against AOL complete with class-action law suits- came at the beginning of the telecast of the Superbowl, traditionally the most-watched TV program in the U.S each year.

Compuserve, AOL's prime enemy in online services, sponsored an ad that simply showed a black computer screen and the sound of an engaged modem.

It was the sound and image received by millions of Americans, many of whom were lured online for the first time by Case's pricing plan, everytime they tried to call up AOL..

"People said we were greedy but we honestly weren't, we simply underestimated the pent-up demand for Internet access which we unleashed by our new pricing plan." Case explained.

At their worst, AOL critics said Case was being greedy and that AOL's tactics would do more to kill the Internet than grow it. Nine months later, that hasn't happened. After emergency plumbing to add thousands of new log-in numbers and huge banks of receiving `industrial' modems around the country, America Online says the service is bigger and better than ever. "We were swamped, overwhelmed by the demand. But we have managed to keep most of the new members." he said.

America Online, which played a key role in shaping the way Americans view the internet, has Australia high on its list of possible new markets.

While Australia and the surrounding Asian region present vast opportunities in information services, Case said AOL would baulk about commencing a service in Singapore, China or anywhere where government seeks to curb development by over-regulation.

"Different governments have a different familiarity, a different commitment to building the Internet. As a business, we would resist (government) curbs and probably not go there because we believe it's important to develop this as a global medium."

"We absolutely want to be in Australia" Steve Case told the Australian Financial Review.

 "We are in discussions and we are having some interesting conversations" he said.

It is believed AOL has been in discussion with a number of telecommunications groups, including Telstra and Optus, about launching an Australian version of America Online.

"I'm optimistic about the possibilities of Australia" Case said. "It's a market that to some extent has already embraced the Internet and there are several hundred local Internet service providers.

"Yet it's a market at this point in time that lacks a service that could bring consumers the kind of service that AOL can. There is a clear opportunity in that people who are using existing services seem excited about the medium so it would be a good opportunity for AOL with the right partners."

Despite the overwhelmingly American nature of AOL and the Internet as a medium, Mr Case stressed that America Online was keen on creating an Australian service.

"We go to Australia as AOL, not America Online. We have decided we can build AOL as a global brand much as CNN is in news or MTV is in music and its working.

"We have over 750,000 customers outside the U.S whereas three years ago it was zero. It's clear people are embracing the concept of AOL as an easy-to-use, fun, affordable service and the AOL brand name does seem to be helpful.

"We have a highly nationalised approach. We are not exporting AOL and the United States with it, but building local content, local software, local partners, local management team. The local approach has been critical to our success."