RealTime IT News

AOL Tempts Dial-Up Users

Attempting to stem the loss of subscribers, America Online today announced it was "strongly encouraging" dial-up users to switch to broadband.

The company is partnering with Bell South, Verizon and Time Warner Cable to offer broadband services priced as low as $29.90.

"We're starting to let AOL members know about this opportunity now to strongly encourage them to improve their online experience with a better, faster Internet connection," Joe Redling, president of AOL's Access business, said in a statement.

As further encouragement, AOL will raise its fee for dial-up subscribers to $25.90 from $23.90, according to the New York Times. Almost 75 percent of AOL subscribers reportedly still use dial-up. AOL did not return repeated attempts for comment.

In order to not compete with sister company Time Warner's RoadRunner cable modem service and premium broadband services offered by other providers announced today, AOL is capping the speed of its broadband service at 768kbps.

Today's action is a response to price cuts being offered by DSL and cable-modem providers. While broadband providers such as Verizon and AT&T dropped broadband charges to as low as $14.95 per month, AOL retained its $23.90 price for dial-up services.

"We believe the upgrade to our network will allow us to build a better experience for our members, bring new subscribers to our network partners, and enhance the lifetime member value of our customer relationships," according to an AOL spokesperson.

Although AOL will encourage its dial-up members to move to broadband, the company will continue to offer and support dial-up, according to a spokesperson.

"We are taking advantage of the improving economics of broadband access to create an offering that combines the AOL service with the speed at a competitive price," said Jonathan Miller, AOL chairman and CEO.

Fifty-three percent of U.S. households in 2005 had broadband connections, according to the Pew Internet & American Life Project.

With 20 million subscribers, AOL is the nation's largest Internet provider. However, as the U.S. has moved to broadband, AOL has lost subscribers.

Wednesday AOL is expected to report its financial health. The Internet portal began 2006 purchasing video search firm Truveo. In late 2005, Google bid $1 billion for a stake in AOL.