AT&T DRAFTS REGIONAL INTERNET PLAN;HOMETOWN NETWORK WEB SITES WILL ROLL OUT IN 70 U.S. CITIES BY '97

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AT&T Corp. plans to host ad-supported regional Web sites in 70 U.S. cities by the end of 1997 through an initiative called the Hometown Network, Advertising has learned.

Already believed to be conducting trials in Sacramento, Calif., and Wellesley, Mass., AT&T is negotiating partnerships and alliances with Reuters NewMedia, NetGravity, Internet Profiles Corp. and Electronic Classifieds, among others.

Strict nondisclosure agreements preclude most partners from commenting.

$100 MIL LAUNCH EXPECTED

Although spending is not known, it's estimated AT&T is budgeting well in excess of $100 million to launch the Hometown Network.

"Local service and local information are extremely important to people," said George Ravich, director of marketing for AT&T's Personal Online Services division. "We want to be the local player, no doubt about it."

HEALTH NETWORK READIED

Although separate from the Hometown Network, AT&T's Personal Online Services focuses on creating content on topics of interest to consumers. Its first product, the AT&T Health Network, will launch as a subscriber-based service this summer.

Analyst and production company executives said products developed by Personal Online Services will be a key part of the content offerings of the Hometown Network.

For its Health Network, AT&T has partnered with Rodale Press, MediLife and IVI Publishing to provide content on lifestyles, fitness, health and sex. AT&T plans to create more demand at the local level through cross-promotions with local doctors, pharmacies and health clubs.

`PRETTY POWERFUL PRODUCT'

"Packaging national content with regional services while focusing on local marketing would make a pretty powerful product," Mr. Ravich said.

Hometown Network will be supported by both local and national advertising. AT&T is likely to turn to a Web rep firm when it begins its sales efforts. But the marketer is not yet focused on that aspect; it is only now looking for senior-level editors to manage content development.

Local sales efforts will probably concentrate on cross-marketing opportunities with local retailers, newspapers and other merchants.

AT&T-which also wants to be a player in local phone service-plans to offer discounts and incentives to its existing customer base, numbering more than 80 million people.

"This is a smart play for AT&T because it allows them to differentiate themselves at a more personal level," said Greg Wester, an analyst with the Yankee Group consultancy. "Incentives like discounts for AT&T customers are extremely compelling tools for helping consumers make choices."

AT&T is just one of the many players eyeing the local Web market. Regional Bell operating companies like Bell Atlantic Corp., BellSouth Corp. and Ameritech are all working on Internet products. Pacific Bell already offers Internet access and content to its customers in California.

Microsoft Corp. is spending upwards of $300 million to launch an ad-supported Web product called CityScape later this year, focusing on entertainment options in major cities, including New York, Los Angeles and Chicago. Microsoft is currently looking for editors to spearhead development of regional content.

AOL'S DIGITAL CITIES

America Online is working on its own Digital Cities concept, which launched in Washington earlier this year. Plans call for the service to be available in up to 200 cities within two years. And CitySearch, a startup based in La Crescenta, Calif., has developed a site for Raleigh, Durham and Chapel Hill, N.C., and has plans for 30 other cities by late 1997.

"With so many local offerings coming down the pike, it'll all boil down to brand," Mr. Wester said. "Who are your partners, are the relationships exclusive and how many marketing dollars are you willing to put behind it? .... It helps to be big, and it helps to understand competitive marketing, something the Bells are still figuring out."

Contributing: Jane Hodges.

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