February 28, 2006 4:00 AM PST

AOL hanging up on dial-up customers?

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If you didn't believe America Online was serious about being a broadband Web portal, believe it now.

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. 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.

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. 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.

"All about broadband"
AOL announced in late January a new coast-to-coast high-speed network and has been signing deals with providers for its bundled offering. AOL's ISP partners include DSL providers BellSouth, Verizon, AT&T and Qwest, and cable providers Time Warner Cable and Charter Communications.

"I'm sure one of the clauses in AOL's deal with broadband partners was a fairly hefty commitment as far as how many customers would make the switch," said Joe Laszlo, a senior analyst at JupiterResearch. "Two dollars removes any sort of price-related inertia that their dial-up customers might feel."

AT&T and Verizon have succeeded in using price cuts to lure customers away from dial-up, while cable companies have been competing more on speed than price.

"This is yet another example of how AOL is becoming a company that's all about broadband," said Will Richmond, president of consulting firm Broadband Directions. "There's no question that all the forecasts point to the dial-up subscriber count decreasing in the next few years. AOL understands that."

In August AOL launched a new AOL.com portal, that opens up to any Web surfer content that used to be available only to AOL subscribers. This enables AOL to better compete for lucrative online advertising with Google, Yahoo and MSN.

AOL's affiliation with Time Warner and other subsidiaries also enables it to focus on video and other multimedia content, which can be painful to experience on dial-up.

In addition to Web, local, video, image, music and shopping search, AOL's Web site offers video on demand, AOL radio programming, tons of entertainment and other news, as well as AIM Triton, a communications service that includes instant messaging, e-mail, SMS mobile text messaging, voice and video chat.

AOL is not overly concerned about losing customers over the price increase, Bentley said. "We still offer the most comprehensive package" including round-the-clock customer support, access to an AOL e-mail account and unlimited e-mail storage, she said.

The company will work on "other pricing options" for the small number of dial-up subscribers who do not have broadband service available in their area, Bentley said.

One reason some people will hesitate to leave AOL is because they don't want to lose the e-mail address and screen name they've had for years.

"AOL's (customer) base has been with AOL for a long time and has long-established relationships with people," Laszlo said. "Your online identity is defined by your e-mail address and online or screen name. AOL does community very well."

Laszlo and Weiner said they don't expect e-mail addresses and screen names to become portable in the way that phone numbers are for phone-service customers who move to different carriers.

"E-mail addresses inherently are tied to the provider in the way that a phone number is not tied to a wireless carrier or phone company," Laszlo said.

See more CNET content tagged:
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27 comments

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No reason not to leave..
The argument about losing your screen name and email is not even valid anymore. AOL began several months ago allowing you to continue using your AOL screenname with the AIM product upon cancelling your AOL subscription. They simply require that you sign into your webmail account with your old screenname and agree to the AIM terms of service.. Your old @aol.com email address gets moved to the 2GB @aim.com email service, and your screenname may be used with AIM. Email sent to your @aol.com address will go to your new @aim account.
Posted by RickNY (1 comment )
Reply Link Flag
You Can use IMAP and SMTP for your AoL Email
Another way of keeping your AOL Email Address is to switch to a BTOA Class Account ($4.95/month) and use a Broadband Connection Account (Cable or DSL) from your local Broad Band provider. Your normal MUA can then access your AOL Email via IMAP and submit via SMTP (ie: No need to use the AOL Software with a TCP/IP "Location").
Posted by rarpsl (34 comments )
Link Flag
Way better than AOL
I dumped AOL many years ago and it was the best move I ever made. Yes it is a pain converting to new email addresses but it is worth it. The best approach for people is to get their own domain and a really cheap hosting plan. The cost is about $6 to $10 for the domain name and $5-6 a month for a minimal hosting plan. Then you can keep your email addresses forever, changing hosting plans as you see fit without paying tribute to AOL or putting up with their bureaucracy.

Ronald J Riley, Exec. Dir. Ronald J Riley, President
InventorEd, Inc. Professional Inventors Alliance
www.InventorEd.org www.PIAUSA.org
Posted by Ronald J Riley (27 comments )
Reply Link Flag
bye bye aol
I've been slowly getting ready to leave aol.. and this is the last straw. I use my aol email for "junk" mail anyway, so no big loss. AOL should consider that there ARE still places in the US where broadband isn't readily available.. and I resent being penalized just because I don't want to live in a city.
Posted by Lisaizme2 (4 comments )
Reply Link Flag
Has anyone
Ever met a reasoning/thinking person that pays for "AOL for broadband" or whatever that spyware they install is called in addition to a broadband service provider? If so, were you able to garner why?
Posted by Bob Brinkman (556 comments )
Reply Link Flag
I have
My neighbor had this idea that in order to use AIM they would need to get AOL along with buying CoxHSI. They are not stupid people they just are not computer literate.
When I showed that that not only did they not need AOL for AIM I also showed them GAIM so they could drop the AIM program as well. They were so happy the took the wife and I out for dinner.
Posted by Buzz_Friendly (74 comments )
Link Flag
But Wait!
I recently bought an AOL subsidized PC for my son. With the deal, you must commit to 12 months of AOL dial-up service. No big deal. As soon as we got it home, (last weekend) I called to see if we could upgrade to the broadband option and guess what? -- I CAN'T. Because the broadband is cheaper than the dial up (even though I offered to pay the difference), it voids the contract for the PC if I upgrade. They have, in effect, forced me to stick with dial-up and/or go with another provider and pay for both.
Amazing.
Posted by (1 comment )
Reply Link Flag
So late you get so smart...
That's the trouble with AOL. They make it sound good to get you to
sign up. THEN you find out what a dog AOL really is. Now you're
screwed for maybe a year.

Not amazing. Just the normal AOL 'stick-it-to-the-customer'
business plan.
Posted by Earl Benser (4310 comments )
Link Flag
AOL also forceing people to pay a goodmail Fee
I belong to an Association whoe many members happen to use AOL. Previously our members were simply put on a Whilelist. No long our Association will be forced to pay so much per member to go through a service I belive is called "Goodmail" several dollars per piece of Mail. Therefore our Association is recoimending that ay members that use AOL to switch to a regular ISP. If they do so that could be several hundered people.

IF AOL isdon't careful they could kill there own business big time. between the Goodmail and, forcing people to pay DSL Rates.
Posted by pjonesCET (42 comments )
Reply Link Flag
The times, they are a changin'
One small problem, the last time I saw the broadband connect figures, the majority were still on dialup, further due to technical constraints the bulk of the rural comunities, outside of the major cities, can't be connected, and are stuck with dialup!

Oh well, is AOL saying to all the rural communities, stuck on dial up, thanks for the money, we charge more for less, and now you can go and get lost, because we don't care anymore!

The times, they are a changin'!
Posted by heystoopid (691 comments )
Reply Link Flag
No, the times aren't changing...
AOL has always been an overpriced online provider.

I remember seeing an AOL floppy disk back in the days when it was just starting out. I checked it out, and came to the conclusion that although it was better than Compuserve, Prodigy and Delphi were better. My conclusion was that people wouldn't be swayed by advertising - that they'd see through all the empty promises and AOL would evaporate before long.

People have continued to support AOL for reasons that escape me. It's as if AOL is incapable of losing customers faster than they gain them - even WITH the increase in the number of dissatified ex-customers, and the horror stories of paying for service months after cancelling.
Posted by Jim Harmon (329 comments )
Link Flag
So long TODAY, So long TOMMORROW
I would say a majority of people start of with AOL as their first ISP. Simply because most people are new to the whole area, but now a days people are well aware of their surroundings. Of course some stores like Best Buy will throw AOL down your throat but we are far much wiser then when AOL was the pinnicle of internet connection.
Posted by bobj123 (94 comments )
Reply Link Flag
Pinnacle?
AOL was never the pinnacle of internet connection. Most COMMON, maybe, but hardly pinnacle.

Things are actually better than they used to be. From what I hear, you can actually use such standard email clients as Eudora and Incredimail to read your AOL email. (I suspect there's at least a few hoops you have to jump through to do it though).
Posted by Jim Harmon (329 comments )
Link Flag
Are all these people who use aol...
Really newbies in the computer world? Even as a newbie I knew better than to go with aol.
Posted by Eskiegirl302 (82 comments )
Reply Link Flag
Sadly, no
There are actually people who SELECT AOL from among the many options they know about. Don't ask me why, but they do.
Posted by Jim Harmon (329 comments )
Link Flag
Maybe this is why......
Ted Turner left the company. He wanted to quit his AOL email dial-up, and they wouldn't let him unless he quit.
I don't blame him.
Posted by OldTenor (7 comments )
Reply Link Flag
AOL
I dont care for AOL at all. I have used it before because there is no broadband service in our area so we have to rely on dial up. I never got aol completely off my system without completely erasing everything on my hard drive and reloading everrything except aol of course. It seems to take over every aspect of your computer and makes loading anything but aol interntet software dang near impossible. Maybe im the only one who has noticed this but i doubt it.
Posted by lazarus_vendetta (13 comments )
Reply Link Flag
AOL
The price of $25.90 is only applicable if your phone company works with AOL. Sprint, in my area, doesn't. Since I don't have DSL nor do I have a national cable company service available, it would cost me about $57.00 a month. AOL doesn't tell you all that in their ads. AOL needs to take these kinds of situations seriously, or it's good bye from me as well.
Posted by mlove33567 (1 comment )
Reply Link Flag
Aol,
I used aol religously as my internet provider from 1997-2000 mainly because broadband wasn't available of course. After it was, that was all she wrote for aol who can justify paying 10 dollars a month at the time just to use the aol client? There were other alternatives for dial up at the time of course, aol did have lot's of content others didn't have the email client was easy to use and the chat rooms were great. That is probably's aol's best point, with millions of users you could always meet someone, it didn't matter if you needed a computer saavy person to bounce a problem off with or to be social and meet someone from your neighborhood.

But once you get away from those good points, everything else you can find on the internet. news, radio, sports and all the other crap they have on there is readily available for free. Not to mention you don't even have to install their bloatware of a client that is so full of bugs it's rediculous. Each new release just gets worst, I think they fianlly realized it with 9.0. They have stoped upgrading their client they can't figure out what else to put into it.
Posted by cranbers (12 comments )
Link Flag
AOL Hanging Up On Dial-up Customers
This will be the trend throughout all the industry. I have dial-up service through Bellsouth. Recently, I have had problems getting connected and then when I do staying connected.

Even though my computer is kind of on the old side, (5 years old) which I have taken in consideration for the connection problems. The machine still works. But I have called them and they have changed filters and everything, but I still have some phone and internet problems. I have come to the conclusion that they are doing something to the line in order to make me and other customers like me get fed up and switch to dial-up service. Greed has just taken the day.

For some, $25 may not seem like a lot of money. But those who are on a budget and can't go above a certain price, it is too much. Add that to my phone bill which on average is $60 a month with Bellsouth, minus a $5 cut because I have their phone choice plan, $80 is a bit too much. That doesn't even include my long distance.

Yes, I could switch phone companies to something like Time-Warner phone service and get better calling service as far as price. But if the cable goes out, one has no phone. Then I am right back where I started.

The folks who provide DSL/Broadband services are slowly pricing moderate to low income folks out of the Internet game. And as many people that have DSL/Broadband, I think $15 is a fair enough price for unlimited service.

Like I said, greed rules.
Posted by lynjs (22 comments )
Reply Link Flag
hanging up
Since AOl has made this move, I will probably be moving, too. I've been a customer since I bought my computer and the broadband offer isn't what it appears. The FIRST 12 MONTHS are $25.90, but there is a fee of $19.99 to get the cable moden and a $5.00 fee each month for leasing the modem and at the end of the 12 months the monthly service fee is $35.90 per month. And plus the $5.00 for leasing the cable modem. So long term will be much higher. this is what the fine print said. I've sent an email to AOL to confirm this but haven't received an answer yet.
I'm looking at AT&T for a total package. I am a light user of the internet, because of time restrictions from work and personal life commitments and think these new offers and attendant fees are too much. They will lose customers over this, when they are already hurting.
Posted by jcajun (1 comment )
Reply Link Flag
 

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