Sunday, March 05, 2006

AOL hanging up on dial-up customers?

CNET News AOL recently informed customers that beginning next month, AOL will charge dial-up subscribers $25.90 per month. The price won't be that much of a shock, since it's $2 more than those dial-up customers are paying now.
And anyone stupid enough to pay AoL $23.95 is probably stupid enough to pay them $25.95, even though AoL is using it as a cash cow to enable it to offer Dial Up for $10 through it's Netscape brand name.
More important, it's equal to what high-speed DSL (digital subscriber line) or cable subscribers pay to get AOL services such as e-mail and customer support along with high-speed Internet access.
It is certainly what AoL DSL customers pay for the faster than dialup, but clearly slower than real cable service gets.
The price jump shows just how important it is to the Internet giant to get more of its customers onto broadband. It has led to an obvious question for longtime AOL customers: Who wouldn't move to broadband when it costs the same price? "Given their overall strategy in the Web portal business, (AOL) wants fewer, if any, dial-up customers," said Allen Weiner, an analyst at Gartner. "I think it is part of a strategy to basically shake out of its base the people who are likely high-speed subscribers." AOL makes no bones about the fact that it is trying to encourage people to upgrade to faster service so they can better view the bandwidth-intensive content on the AOL site. "The hope is that we'll be encouraging users to upgrade to broadband because a majority of them will be able to get high-speed connections," said AOL spokeswoman Anne Bentley. But the move could anger some price-sensitive, casual Internet users who will resent paying more for a slower service, Weiner said. "Disincentives are a tragically bad way to go about things," he added. Of course, that may not be a serious concern to the planners at AOL. It has been losing dial-up subscribers for several years as prices for high-speed access have dropped, from 26 million U.S. subscribers in 2002 to 19.5 million in 2005. DSL is priced between $15 and $40 or higher per month, compared with dial-up prices of $4 to $10 a month. About 5 million people in the U.S. pay $15 per month for an AOL subscription and then pay a different Internet service provider for high-speed Internet access under AOL's Bring Your Own Access plan, Bentley said.
People that pay $15 a month for AoL without a connection are really fools. Most AoL services are available to anyone with their own connetion for free, and for those that are restricted (like email), their broadband provider probably has a better service as a part of its connection.
By bundling high-speed access and AOL service for $25.90 a month, AOL is offering a package alternative to members who are now paying for their AOL service and high-speed access separately.

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