My so-called professional writing career began 30 years ago this month when I found that newspaper reporters didn't have to get up as early in the morning as did newspaper delivery boys. The working conditions were better, too, since I never heard of a reporter who missed a deadline because of a flat bicycle tire. At age 14 I started out writing obituaries and haven't progressed much since, though it was only on that very first assignment that I forgot to mention the subject had died. It seemed obvious to me at the time, though not to his widow.

This might be a good time, then, for me to write an obituary for Compuserve, which more or less bit the dust this week and was consumed by a telephone company, an Internet service provider, and America Online. But I can't write an obit for Compuserve until I've done the more important job of even understanding what the hell just happened.

Here are the details of the case, as gleaned by me from the press releases and major news services. Worldcom, a long distance telephone company, bought Compuserve for $1.2 billion in stock, giving H&R Block (Compuserve's previous owner) a three percent interest in Worldcom. Worldcom already owns Uunet, a first-tier Internet service provider. Uunet will take over Compuserve's network and its wholesale and private network customers. Worldcom will give Compuserve's mainframes in Columbus, Ohio and Compuserve's 2.6 million (2.9 million in some stories, but what the heck) retail customers to America Online along with $175 million. America Online, in turn, will hand over its own network operation to Worldcom and sign a five-year deal making Uunet AOL's primary network services supplier. And somewhere in there Bertelsmann, the big German publisher, pays $75 million to AOL for the right to keep being AOL's partner in Europe.

Got that?

Now here's the trick question: How much is Worldcom worth?

If H&R Block got three percent of Worldcom and that stock is worth $1.2 billion, then all of Worldcom must be worth $40 billion.

FORTY BILLION DOLLARS? British Telecom is buying MCI for less than $20 billion and MCI is bigger than Worldcom. So is Sprint. Had you even heard of Worldcom before this week? Isn't it one of those alternative long distance companies that prints calling cards in the back of airline magazines? There is no way Worldcom is worth $40 billion, yet of all the thousands of words written so far about this deal, am I the only person to actually do the math? Some very well-paid press people should do time writing obits.

Okay, so the math is wrong, but how's the deal? It's great for everyone. Compuserve, which couldn't decide whether it was a stodgy online service or a stodgy network provider doesn't have to be either. AOL, which couldn't decide whether it was an on-the-edge online service or an over-the-edge network provider, gets to stick to content and stop pissing off users by pretending to know what a modem is. Uunet grows into a network service provider big enough to slug it out with anyone including BT/MCI or even AT&T. In the ISP shakeout that is always upon us, Uunet is now too big to shake out. And Worldcom can pursue its dream of becoming the first big phone company to route some serious voice traffic over the Net, though don't expect that for at least another year.

Since I am so good at math this week, let's look at the deal a little bit more closely. AOL gets 2.6 or maybe 2.9 million extra customers, including 800,000 European customers. Bertelsmann pays $75 million for a continued partnership with AOL for those European Compuserve customers, which finally gives us an idea what AOL thinks a retail customer is worth ($75 million for half of 800,000 customers equals $187.50 per customer).

In the magazine and newspaper businesses, the folks down in the circulation department always know what it costs to "acquire" a subscription. They know what they are willing to pay to get a new subscriber, and the amazing this is that the amount they are willing to pay is often equal to what it costs to "service" the subscriber for a year. AOL costs $19.95 per month or just under $240 per year. Leaving some profit margin, $187.50 is at least in the right ballpark. So the 2.75 million (I split the difference between 2.6 million and 2.9 million) Compuserve customers AOL is getting from Worldcom are worth $515 million. Add the $175 million in cash and AOL's network operation appears to be worth $690 million, which is about twice what AOL spent to build it. In the short term, then, the biggest winner here is AOL, but all they are winning is some time.

AOL not only becomes by far the largest online service, with almost 12 million users they will define what being an online service even means. Prodigy, Genie, and the Microsoft Network will be lost in the noise: They mean nothing. From this point on, there will be only AOL and the Internet. But there is still a serious question of whether AOL can survive in the long term.

As the biggest of the big, AOL can buy bandwidth cheaper than any retail Internet Service Provider, but this is the only area in which their costs are lower than your local ISP's. AOL has two operations to run, at least for the next year or two. Compuserve and AOL will be separate for that long, and running separate operations costs separate money. Unlike your local ISP, which spends nothing on content, AOL/Compuserve spend a lot on content. And unlike the other emerging media companies like Yahoo, Excite, and even Netscape, which also spend a lot on content, AOL/Compuserve has to spend more money to maintain all those points of presence (PoPs) in every city.

But wait, doesn't AOL/Compuserve have their proprietary content AND full Internet access? Hardly. Even though TCP/IP is the native protocol of AOL, the kludge of gateways and proxy servers needed to give users what purports to be Internet access not only doesn't cut it, but costs extra money.

So while AOL looks big for now, it faces enormous challenges in the future. The writing is on the wall, both for AOL's demise and for its salvation. That writing is in the form of the five-year network service agreement with Uunet. If AOL does the right thing, it will turn itself in that time from an online service provider to an Internet content provider and five years from now that Uunet contract won't be extended because it won't be needed. By then PoPs will be pass�.

And if AOL can't or won't make this transition, then what happened to Compuserve will happen to AOL. Remember an outfit called The Source? It was the very first online service and offered innovative 300 bps content like its own news bureau back in the early 1980s. But the economics of The Source just didn't compute and it was absorbed into Compuserve, which is now being absorbed into AOL. It can happen again very easily.

How, exactly, does one prepare to be assimilated?