December 3, 2002 12:02 PM PST

New AOL price plans in the wind

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America Online is mulling new pricing plans that could foreshadow a price hike for its flagship service, Chief Executive Jonathan Miller said Tuesday.

Commenting at an analyst meeting, the recently appointed head of AOL Time Warner's online division hinted at subscription charge changes in coming months--including a possible price increase for its flagship Net access service. The company currently charges $23.90 a month for unlimited dial-up access and $54.95 for its high-speed product, both among the priciest in the business.

Miller emphasized that the company has no immediate plans to tinker with prices, but did not rule out the possibility of a rate increase. "If we build value into the product, we can do that," he said.

Miller added that AOL is looking "very seriously" at getting into the low-cost Internet access business. Last month, the company quietly began selling a prepaid Internet access plan through partners such as Western Union.

Other budget plans that the company is considering, Miller said, include a family package that would allow several members to simultaneously access the AOL service using a single account.

AOL, the world's largest Internet service provider with 35 million subscribers, is grappling with declining subscriber growth in its core dial-up business. Many analysts believe the market for dial-up ISP services in the United States is saturated, which has sparked a furious battle for share among AOL and its chief rivals, Microsoft's MSN and Yahoo.

AOL and MSN unveiled new versions of their products last month, as both companies seek to court high-speed customers. Yahoo, meanwhile, jumped into the game recently, offering a co-branded dial-up and broadband ISP service with Baby Bell SBC Communications.

Discount ISP United Online is among the biggest players on the low-cost end of the scale, although the company has also lately moved more heavily into higher-cost broadband services.

 

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