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.

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