AOL: Quiet neighbor

The world — or at least, the World Wide Web — is AOL's oyster. With the

Internet service provider poised to merge with Time Warner Inc. to form

the largest media company in history, it appears America Online Inc. has

everything going for it: money, markets and growth.

Although the company is growing at Internet speed, it has only a few

deals with the federal government. "The largest content provider in the

world — the U.S. government — and the largest purveyor of information to

the world — AOL — ought to go out on a date," one industry insider said.

Even so, AOL has a quietly growing presence in the market, represented

by diverse business lines that range from its Netscape Communications Corp.

Web software to interests in mapping software and Web portal services.

AOL has its headquarters in Dulles, Va., less than an hour's drive from

the nation's capital, and it keeps a mega- presence on Capitol Hill to keep

regulatory legislation at bay.

On Feb. 28, AOL chairman Steve Case made one of his increasingly regular

appearances before Congress to discuss the pending $138 billion merger with

Time Warner. He laid out his vision for the Digital Age and told members

of the Senate Judiciary Committee that the United States is on the "verge

of a second Internet Revolution — a transformation of the way we live our


AOL works around the edges of government every day. As Case pointed

out in his testimony, AOL handles nearly 900 million messages daily — 50

percent more than the 600 million pieces of mail handled daily by the U.S.

Postal Service.

Most of AOL's government business has come through acquisitions. When

the company acquired Netscape two years ago, it inherited a substantial

chunk of business with the Justice Department, NASA and the Energy Department,

among others.

The biggest contract is with the Defense Department to provide a suite

of enterprise messaging, directory services and Web server software. Although

the amount of the contract has never been disclosed, it is estimated to

be in the "tens of millions of dollars" to provide unlimited use for DOD

personnel and on-site contractors.

"There is no other organization that has a contract like this with DOD,"

said John Menkart, Netscape's director of government sales.

Peter Thorp, Netscape's vice president for federal business, said in

the past two quarters, Netscape has exceeded its previous government sales.

Nevertheless, the company is still "chasing business" with the federal government,

he said.

"Doing business with the federal government has gotten easier over the

years. They are terrific. They know a good product. They ask you to follow

certain rules. They behave like business people," Thorp said. He declined

to disclose how much business Netscape is doing with federal agencies.

While browsers are the company's most conspicuous piece of the federal

IT market, the multibillion-dollar corporation is also working closely with

the government to provide access to agency Web sites.

In December, AOL launched, an AOL-owned and

-operated Web portal that serves as a public directory to federal agency

Web sites. Using the service, a person wishing to find information about

benefits would find links to the Department of Veteran Affairs, the Labor

Department's Pension and Welfare Benefits Administration, the Social Security

Administration and Internal Revenue Service.

"We have organized [links to] government Web sites in a way that makes

sense and helps people find things from all agency sites," said AOL programming

manager James Vaughn during a demonstration for agency officials Feb. 23.

Because most people are unfamiliar with how government agencies are

organized, it can be difficult to find the right information on the Web,

Vaughn said. "For instance, most people are not aware that the Department

of Agriculture is in charge of food stamps, not Health and Family Services." also allows users to file complaint forms with agency

offices. After having the user answer a few questions, AOL software will

create the appropriate form and provide directions on how to submit the

complaint to agency departments.

The AOL site only links to agency Web sites — it doesn't provide content — so AOL personnel cannot record confidential information. The ISP also

does not keep demographics on the users accessing agency sites and doesn't

charge a fee.

AOL's slice of the federal IT pie also includes the a more traditional

government function: the mapping business. With the purchase of MapQuest

in December, AOL bought itself a relationship with the National Imaging

and Mapping Agency and the U.S. Geological Survey. MapQuest, one of the

leading providers of maps on the Internet, uses information provided by

government databases to create interactive maps. MapQuest also is a leading

provider of digital mapping technology and is working with government agencies

and private companies to establish international mapping standards.

AOL is now working to link users to state and local government agencies

based on a person's ZIP code. Using mapping technology from MapQuest, when

a person types in their Zip code, only government Web sites within a certain

radius will be listed. National and federal organizations also will be included

in the local lists, Vaughn said.

Lastly, the company is pursuing a charitable agenda, one that may help

its fortunes on Capitol Hill as well as help build market share. Case announced

during his March 2 Senate Commerce, Science and Transportation Committee

hearing that AOL is working with government agencies to help eliminate the

"digital divide."

The company is launching PowerUp, a public-private partnership that

will set up community technology centers to teach young people IT skills.

Last year, AOL awarded more than $40,000 in grants to rural communities

who used the Internet to help revitalize towns of 10,000 people or less.

"It is a politically savvy organization," said Larry Allen, director of

the Association of Commercial Products and Service Contractors.


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