America Online Inc. , is backing away from a promise made
to some of its customers last year who use another Internet service
provider (ISP) for Internet access but use their site to surf the ‘Web.
In October 2001 the number one ISP in the nation promised existing Bring
Your Own Access (BYOA) members they wouldn’t be charged the new $14.95
monthly rate for “piggybacking” onto AOL services and community of Web sites.
That’s changed — a sure sign AOL officials are looking to pad their
revenues at a time when investors see the stock as stagnating and their
operations failing to deliver on the promised successes of a merged AOL
Time Warner.
Andrew Weinstein, an AOL spokesperson, said he didn’t know how many
subscribers around the U.S. are signed on as BYOA members. AOL officials
maintain the price hike is necessary for the many services the ISP now
offers online compared to when the service first started and the $9.95 rate
was determined.
The BYOA program was useful for many Americans who wouldn’t normally
receive AOL, especially in communities where customers would have to pay
long-distance phone charges to access one of the ISPs POP servers.
The worry, among smaller ISPs in the U.S., is customers will flee their
service and sign onto the full-fledged AOL service at $23.95. Subscribers
paying $9.95 for BYOA could justify using a local ISP (normally priced
between $10-$15 a month) for their Internet access. The rate hike puts the
local Internet bill between $24-$30 a month.
Competing ISPs serving small towns and rural communities aren’t much
worried by the news of a higher BYOA fee for users in their service area,
knowing most don’t have much choice if they want to continue using AOL’s
extensive services.
Fledgling providers in urban cities are worried, however, knowing their
BYOA customers will likely leave rather than pay more for AOL than they
could get on their own.
Jason Ellis, chief executive officer of Fitchburg, MA-based AlphaBreeze
Technologies doesn’t know how many BYOA members use his local POP server to
get onto AOL’s service but does know they’ll likely leave soon, since AOL
already has a presence in the city.
AlphaBreeze’s subscribers used his service because the frequent busy
signals at AOL and the prompt customer support at AlpaBreeze made his a
better offering. Originally planning to raise rates at his own ISP for
access, he quickly scrapped that idea after hearing of the news. As it is,
he thinks many of his customers will be willing to suffer the inconvenience
of AOL access and support and make the switch.
“The people who use AOL through our company tend to like AOL,” Ellis
said. “To those of us in the ISP community and those who have been using
the Internet for a while, we know that you can find the same or better
services at a lot of places on the Web, but many AOL users are novices who
think AOL is the Internet.”
While ISPs might not be happy about the price rate increase, many of AOL
Time Warner’s shareholders likely applauded the decision. Even before the
merger was
blessed by the Federal Trade Commission, executives have been hyping
the new entity’s ability to cross-market music, movies and publications to
an online community of more than 33 million souls.
On Feb. 1, AOL/TW announced
losses of $1.09 billion in the fourth quarter of 2001 and predicted flat
growth in the first and second quarters of 2002. Officials promised
analysts and investors at the time AOL/TW’s subscription services would
carry the mega-corporation through the lean times until advertising
revenues rebounded.
