Whatever happened to AT&T's WorldNet?

WorldNet, the long-distance giant's own online service, launched in 1996 with the promise of making the Net "as universally available, and as easy to use, as telephone service."

But two years later, the service is not even as universal, nor as easy to use, as AOL.

	AT&T teams with Excite
	After failed AOL deal, what's next for AT&T
	AT&T, Lycos to develop new online service

With around 1 million subscribers, WorldNet has less than a 10th of AOL's user base, despite the fact that AT&T, one of the largest telecommunications companies in the world, serves 70 million home telephone customers.

Why the big disparity? Experts say AT&T (NYSE:T) just didn't take the right approach for mainstream online users.

"(WorldNet) didn't really have the environment people need," said analyst Julia Pickar of Zona Research Inc. "The mass market feels very comfortable with the AOL-type environment -- really idiot-proof."

AT&T isn't the only big, rich company that has failed to replicate AOL's (NYSE:AOL) success. Sprint Communications Co. LP, SBC Communications Inc, IBM Corp. (NYSE:IBM) and others have all tried, and failed, to capture the pocketbooks of the average, "newbie" Internet user.

Of course, 1 million members is nothing to sneeze at, and among AOL's competitors, AT&T is probably the most successful:

"They're pretty much the largest ISP out there -- you have to give them a little credit," said Mark Mooradian, a director with Jupiter Communications.

Observers say it's a simple difference in philosophy. America Online -- and, not coincidentally, popular Web companies such as Yahoo! Inc. and Excite Inc. -- see themselves as media companies, essentially selling information, resources, and ways for people to connect to each other.

AOL has also included a great deal of exclusive content since the days before the Internet grew popular, making it possible to have a complete online experience without ever leaving the safe confines of the service.

AOL like 'Truman Show'
"It's like (the recent movie) 'The Truman Show,' " Pickar said. "He lives in a giant ball, and it's an entire world. He's not aware of the world outside, but he's perfectly content."

AT&T, on the other hand, has treated its Internet service from the beginning as an extension of its telephone operations. In the press release first announcing the service, in 1995, the company emphasized WorldNet's navigation tools and information directories.

Even now, the home page WorldNet users see when they launch the service (which runs over a standard Web browser) is little more than an organized collection of links to the Internet.

The Web is the content
"Our strategy has always been that the Internet and the Web are the biggest platforms around, in terms of content," said WorldNet spokesman Mike Miller. "There is a real value to customers in providing them with navigation tools and a Web site to get them where they want to go."

Nevertheless, the numbers show that inexperienced users feel more comfortable logging onto a service that holds their hand through every step of the online experience, as AOL does, with its own custom-built software.

In recognition of this trend, AT&T recently struck a series of deals with such Web gateways as Excite Inc. and Lycos Inc. to offer versions of its service using content from the gateway sites. Like AOL, those services offer a number of features under one roof.

The strategy is closely similar to Walt Disney Co.'s thinking in purchasing 43 percent of Web gateway Infoseek, also this week.

Out of the bubble
In the meantime, AT&T is continuing to roll out technical add-ons to its Internet service in an attempt to lure more customers. For example, it plans to offer a "click to chat" feature that would let users initiate an anonymous telephone conversation with those they meet online.

Some suggest AT&T would be better off focusing on such technology, and outsourcing its consumer-related business altogether.

"AT&T should follow Sprint's cue by admitting its inability to understand the Internet access market and let @Home manage WorldNet's customer care and support," said a recent report from Jupiter Communications, which concluded, "Telcos have the distribution, but not the drive [to make it as ISPs]."

The attempted purchase of AOL, experts say, was itself a recognition of AT&T's inability to build a consumer Internet business from scratch. It would have let AT&T hand over the reins to a so-called "portal" company with proven expertise in that area.

"Instead, they're going to have to settle for some loose relationships with other portal sites," said analyst Pickar.

They'll also have the steady trickle of the more experienced AOL users who, like The Truman Show's Jim Carrey, realize they're living in a bubble and try to escape.