BT Bears Down On AOL With Global Portal Expansion

British Telecommunications PLC, the United Kingdom’s dominant telephone and Internet carrier, announced a deal today with San Francisco, California-based LookSmart,Inc., to launch Internet portal services in Europe and Asia.

Under the equal ownership joint venture, BT and LookSmart will create country-specific Web navigation sites based on search sites that LookSmart has already begun to develop. LookSmart has Web navigation directories for 17 countries, including Japan, Korea, Singapore, Malaysia, France, Spain, Italy, Denmark, Norway, Sweden, Finland, New Zealand and Mexico.

LookSmart also announced an agreement with Inktomi earlier this week to strengthen its search engines and expand its operations to offer customized search services for already established Web sites.

LookSmart provides navigation products to more than 280 Internet Service Providers and 600,000 Web sites, including The Microsoft Network, Netscape Netcenter, Excite@Home, AltaVista and NetZero.

International Partner

The joint venture will have access to many global Internet service providers through BT’s already established partnerships. The company’s name may say British, but BT has reached well beyond its home base to form partnerships in 46 countries.

BT partners include German industrial group VIAG, Japan Telecom, Telenor in Norway and Arrakis, Spain’s leading Internet service provider.

Using these partners, BT and LookSmart “have established a new model that combines Web navigation with access on a global basis,” LookSmart says. Although BT has an installed base of more than 31 million Internet and wireless access customers, the LookSmart agreement does not apply to services developed in the United Kingdom.

In addition to search engines, the sites will offer local content and news, Internet communications and e-commerce services. The duo will also offer businesses syndicated services through ISPs and other partners, similar to the way LookSmart operates in the United States.

Challenging AOL

Like America Online’s immensely successful U.S. model — which it is now deploying on other continents — the BT-LookSmart plan will provide both content and Internet access through BT’s global partners. Since both companies have offices and experience in foreign markets, BT and LookSmart argue that they will be able to build “culturally sensitive and locally relevant directories” that will draw customers.

While local Internet access partners reap the online access revenues, BT and LookSmart plan to generate revenue from advertising, licensing, e-commerce setup services, and their own e-commerce transactions.

America Online has already established customized versions of its original online service for Brazil, Canada, Germany, France, the United Kingdom, Sweden, Japan, Australia, Hong Kong, Mexico and Argentina.

BT and LookSmart remain undaunted, however, citing bullish research predictions on the growth of the European and Asian Internet businesses. According to BT, Western Europe already accounts for about 29 percent of the world Internet population, and the Asia-Pacific region about 7 percent. Comparatively, the United States represents a 44 percent share.

By 2003, Western Europe is expected to nearly match the United States for Internet use at 34 percent and 35 percent, respectively, of the total Internet market.