- The Washington Times - Wednesday, February 22, 2006

America Online Inc. is raising the price of its dial-up Internet plan to match the cost of its new high-speed connections, an attempt to shift customers away from the traditional service that once defined the company but has been steadily losing subscribers.

AOL, the Sterling, Va., online division of Time Warner Inc., began notifying members of the change this month, spokeswoman Anne Bentley said yesterday. Beginning March 9, the monthly cost of the basic unlimited dial-up plan will increase $2, up to $25.90.

The goal is to “encourage our members to migrate to our new coast-to-coast broadband network,” Ms. Bentley said. “Members using the AOL service with a high-speed connection do more and spend more time online.”

AOL’s broadband service, costing as little as $25.90 a month, is offered through partnerships with cable operators Time Warner Cable and Charter Communications Inc. and regional Bell phone companies offering DSL.

While AOL remains the leading Internet provider, last year it lost 2.8 million customers. That brought its U.S. total to 19.5 million, down from a 2002 peak of more than 26 million. Many subscribers left for cheaper or faster rivals.

Foreshadowing the dial-up price increase, Time Warner Chief Executive Officer Richard Parsons said earlier this month that AOL’s goal is to guide the migration of its customers.

“We’re trying to actually accelerate the transition of our narrowband customers who are inclined to leave for broadband anyway,” Mr. Parsons said. “Keeping them in our house and in our network and in our universe from an advertising perspective makes sense.”

Analysts say that while the broadband offerings will likely be less profitable in subscriber fees, given its partnerships with providers, they will help AOL to retain its users and continue guiding their Web surfing habits among Time Warner and AOL sites.

AOL’s overall strategy has been shifting toward the broadband audience.

AOL tore down its members-only “walled garden” last summer, introducing a video-oriented Web portal geared toward high-speed users. Company executives say the strategy of giving away music, video and online services to boost ad revenue has been working.

For customers who want or need to stay with dial-up, AOL will offer lower-priced plans. A limited $14.95 plan with 10 hours of dial-up access remains, and AOL will provide some customers with an unadvertised plan charging $18 a month with a one-year commitment.

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