United Online Downplays AOL’s Low-Price Challenge

AOL’s plan for low-price Internet access only underlines the fact that quality service can be had for around $10 per month, an executive with rival United Online said today.

“It’s been a long time coming,” Brian Woods, United Online’s chief marketing officer, told internetnews.com.

Adding AOL to the ranks of “value” Internet service providers, should dispell any lingering doubts about the reliability of low-price offerings, Woods said.

In addition to AOL, EarthLink , through its PeoplePC subsidiary, already has a bare bones Internet service for $10.95 per month. An EarthLink spokeswoman was not immediately available for comment.

“As the brand leader (in the value space), we think we’ll get our fair share,” said Woods, who added that the Westlake Village, Calif., company has no plans to drop prices.

It is, however, looking to improve its distribution and match competitors. Today it said its Juno and NetZero dial-up Internet services are now available through Best Buy stores.

The official kickoff of the 3-year pact comes just a day after the company’s stock was rattled by reports of AOL no-frills version. Investors worried that AOL’s move would undercut United Online, and sent shares plummeting 20 percent. The issue rebounded slightly today.

AOL already has a deal with Best Buy, as does EarthLink . So, the deal doesn’t necessarily give United Online an edge, but it does keep it in the game. Woods said United Online held off on the partnership until it built up its name recognition.

United Online’s agreement with Best Buy will promote its NetZero and Juno services, which sell for around $10 per month, as well as recently launched “accelerated” dial-up services, which promise faster speeds than traditional access and cost about $15 per month.

The pact includes signage, disk displays and brochures and sales force training. So far it is only in Best Buy stores in the United State. The retailer, which is among the biggest PC sellers in the retail space, also has stores in Canada.

Woods said United Online is “investigating other distribution opportunities” but declined to name other retailers.

Some ISPs also have distribution agreements with Circuit City.

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