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Technology Stocks : America On-Line: will it survive ...?
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To: K. Wehr who wrote (635)11/18/1996 2:08:00 PM
From: jack rand   of 13594
 
$1/hr/no minimum threat to AOL

Competitor response to AOL's $19.95 flat rate probably will be
broader adoption of $1/hour, no minimum, with cap of $19.95.

AOL has repeatededly said that most subs use well under 20 hours
per month. It's now betting that most will gladly double their bill.
But AOL reported that conversion to the previous 20hr/$20 plan had
been under 20%. The new pricing focus appears at odds with the
experience.

Competing with AOL's new plan are and will be $1/hr or lower plans
with either lower minimums or no minimums. e.g. BellSouth $9.95/10
hours additional $1; PaBell 20/$14.95, $.50 additional with $19.95
cap.

********* AOL can't afford such plan. Its content and other
ambitions need the cash AND its stock price can't afford the
unpredicability of revenue that no-minimum would entail.

$1/hr no-minimum likely would appeal to most of AOL's users.
Even Sprint's $1.50/hr no minimum (in addition to $19.95 flat).
beats AOL's new `light user' plan of $4.95 for 3 hours with
additional hours at $2.50.
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