Hugh Stephens, Vice President

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Hugh Stephens, Vice President

• AOL Time Warner Public Policy
• Asia Pacific Region

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Agenda

• Introduce America Onlines business
• Review current environment in China for the
  Internet and Interactive Services
• Discuss lessons learned for successful growth
  of Internet in other markets
• Highlight hopes for the future

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Introduction to America Online
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Who Is AOL, Inc.?

• A wholly owned subsidiary of AOL Time Warner
• The worlds leading interactive services company
• More than 30 million members in 17 countries
• 7 languages
• Approximately 15,000 employees
• Offices around the world in the US, Asia, Latin
  America, Europe
• Consolidated revenues of US 7.7 billion

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America Onlines Mission

• To build a global medium as central to peoples
  lives as the telephone or television. . .
• and even more valuable!

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The Online Industry Leader
31 Million Members!
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AOL Puts It All In One Package
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Usage Patterns Reflect Everyday Interests
How Members Use AOL
Internet14
Commerce,Services, and Content47
Mail26
Chat13
Source Company Reports
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AOL Anywhere

• Three Part Strategy

• AOL functions available on the Web for members
• Communicator product on devices for members
• Full featured product for appropriate devices

Connectivitywill extend beyond the desktop
computer
Online Appliances
Smart Phones
Set-top
Pocket Devices
Mobile Computers
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Localized Services

• Languages
• English (UK, Canada, Australia)
• German (Germany, Austria, Switz.)
• French (France)
• Japanese (Japan)
• Dutch (Benelux)
• Portuguese (Brazil, 1999)
• Spanish (Mexico,Argentina)

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Global Trade and Regulatory Environment
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Benefits of flat-rate pricing

• Retail flat-rate pricing structures stimulate
  Internet usage
• Wholesale flat-rate pricing results in lower
  rates for end-users
• Wholesale flat-rate pricing creates level playing
  field for independent ISPs

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AOL Members Time Online Has Grown Sharply
Average Minutes per day per AOL Member
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But Usage Lags Where Per-Minute Rates Are the Norm

• A dramatic difference exists in the amount of
  time spent online by US AOL users and those in
  other countries

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Current Environment
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Huge Potential of PRC Interactive Services Market

• Less than 2 Internet penetration
• Relatively fast adoption of the Internet by
  people in the PRC as compared to other countries
• Internet can become more and more central to the
  daily life of PRC consumers

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Huge Potential of PRC Interactive Services Market

• Number of Internet users in PRC has been
  increasing tremendously

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Ingredients for Successful Internet Strategy
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Lessons Learned for Successful Internet Growth

• While China is unique in many ways, AOL
  experience points to some key ingredients to
  success
• Convenient and easy to use services
• Tailored to local consumer interests with local
  content
• Low cost access and telephone/communication
  charges
• Simple and convenient billing/payments systems

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Lessons Learned for Successful Internet Growth

• Confidence that online experience is safe,
  including protecting children from harmful
  content
• Ability to develop multiple revenue streams
• Subscriptions
• e-commerce
• advertising

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Hopes for the Future
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Hopes for the Future

• WTO accession will strengthen Internet
  development in China
• Foreign participation for its own sake is not the
  major benefit -- the commitment to a regulatory
  framework that encourages competition is the key
• AOL hopes to play a positive role in this process
• Making the Internet a mass medium that is
  affordable, useful, and easy to use for the
  Chinese people

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