Yahoo! Takes Aim at AOL on Broadband - TheStreet

Yahoo! Takes Aim at AOL on Broadband

The Yahoo! Plus package appears to be aimed squarely at AOL's fast-Internet effort.
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The broadband gold rush continues to yield new prospects at

Yahoo!

(YHOO)

.

The Sunnyvale, Calif., online media giant said on Monday it would offer a premium package of services aimed at Internet users who are migrating to high-speed Internet connections. The push by big communications companies to cash in on that shift has become a key competitive story this year, threatening to alter the balance of power in the growth-strapped telecommunications and cable industries.

The new service, dubbed Yahoo! Plus, combines various utilities, such as parental controls, antivirus software and various email accounts, with entertainment content related to video, Internet radio and online gaming.Yahoo! says the service, priced at $5.95 a month with a 90-day free trial, will launch later this month.

The offering appears to be a cut-rate version of America Online's Bring Your Own Access edition of AOL for Broadband, a $14.95-a-month service that provides access to

Time Warner's

(TWX)

AOL. That service is also targeted at consumers migrating from traditional dial-up Internet service to high-speed access provided by a cable TV system operator via cable modem, or by a telco via digital subscriber lines.

The latest offering is the latest example of Yahoo!'s effort under CEO Terry Semel to diversify beyond the Internet advertising business that originally brought it to prominence and profitability. Yahoo! Plus will also give the company another way to play the broadband game that it already has a stake in thanks to its DSL venture with giant telco

SBC

(SBC)

.

Meanwhile, AOL continues to face a rising tide of competitors offering products that seek to undercut the New York company's products on price. ""We think ... Yahoo!'s announcements will help build consumer awareness of the premium broadband category and -- by comparison -- will highlight AOL's unmatched strengths as the safest, easiest and most compelling offering in that space," an AOL spokesman said.

On Monday, Yahoo!'s shares fell 69 cents to $42.16, while Time Warner's shares were up 11 cents to $16.52. Yahoo! shares have nearly tripled over the last year as investors have resumed their love affair with pricey tech stocks.

Judging from Yahoo!'s announcement of the service, Yahoo! Plus's strength lies in utilities and communications tools rather than entertainment. While the press release is heavy on utilities and communications tools such as pop-up ad blocking, easy photo sharing, antispam guards and multiple customized user accounts, it contains only passing mention of "premium video content from leading news and entertainment sources," a premium version of LaunchCast Internet radio, and tournament-playing in Yahoo! games.

AOL, in comparison, has placed heavy emphasis recently on exclusive entertainment content on its service -- for example, making online versions of Time Warner magazines available only to print subscribers and AOL members.

The big telcos have spent much of 2003

cutting prices on their DSL offerings in an effort to beat back the advances of cable companies, who are perceived to have a

technically superior product. But the big cable companies have indicated they are

holding their own so far.