FYI,
Subscribers to America Online Hit
Traffic Jam as Flat Rate Service
Begins
Source: The Philadelphia Inquirer
The Philadelphia Inquirer via Knight-Ridder/Tribune
via Individual Inc. : By Reid Kanaley
Knight-Ridder/Tribune Business News
Dec. 6--Gary H. Arlen may make his living by knowing
what's what in the online industry, but even he could
not get through the traffic jam this week at America
Online.
The nation's most popular online service, with 7
million subscribers, started switching off its
nickle-a-minute meter on Sunday, and its customers
responded by visiting the system more often and for
longer stays than ever before.
"I kept redialing, but I could never get on,"
online-industry analyst Arlen, of Arlen
Communications in Bethesda, Md., said Thursday of his
efforts the previous evening. "It happened three or
four different ways, including getting on and all of
a sudden getting knocked off."
Complaints echoed Thursday as AOL struggled to meet
demand created by its move last Sunday to a new
pricing plan: unlimited access for $19.95 a month, a
price competitive with the majority of Internet
service providers. Previously, the service charged
$19.95 a month for 20 hours of service, or $9.95 a
month for 5 hours. After those initial hours, the
rate was $2.95 an hour, or about 5 cents a minute.
The pricing change, along with projections that
membership will continue to grow, had contributed to
recent buy recommendations and a resulting surge in
the AOL stock price on Wall Street. As of yesterday,
AOL shares on the New York Stock Exchange were up 62
percent since the new pricing policy was announced in
late October.
It's been great for investors, and those lucky enough
to log on.
The 7-million-subscriber AOL system is now logging 8
million "sessions" per day, up from 3.5 million this
same time a year ago, spokesman Steve Sigmund said
Thursday. What's more, each session, or visit to the
service by an individual subscriber, is lasting an
average 20 percent longer than before the price
change, he said.
"Our top priority is to ramp up the system and
increase the system capacity to be ready for this
number of people and make the online experience the
best it can be for our subscribers," Sigmund said.
The company had announced early in the week that it
will spend $250 million by the end of June to add
network capacity and upgrade the service.
AOL already claims to operate the world's largest
dial-in network, but said it will add tens of
thousands of new modems monthly through next spring.
The amount of hardware connecting users to company
headquarters in Dulles, Va., will double in the next
six months, until it covers an area the size of two
football fields, said Sigmund.
Will subscribers hold out for the improvements?
Arlen, the analyst, said, "the rule of thumb is, two
or three experiences like this (of being unable to
log on) would knock a lot of people out of the system
altogether."
Meanwhile, AOL is offering advice -- online, of
course -- that includes moving online activites,
especially e-mail exchanges, to the early morning,
and keeping a printout of alternate phone numbers to
dial in case regular access numbers are busy.
In a related matter, Massachusetts officials said
Thursday that America Online had reached an agreement
with 20 state attorneys general, including those in
Pennsylvania and New Jersey, in which AOL has agreed
to clarify subscribers' billing options.
The states had called AOL's plan to automatically
convert all subscribers to the $19.95 rate deceptive
and misleading.
According to the agreement, AOL must get consent for
the billing change from its subscribers; provide
refunds to all customers who ask to switch back to
the old plan of $9.95 a month for five online hours,
plus $2.95 for each additional hour; institute a
toll-free number for inquiries regarding the rates,
and notify members of their rights via U.S. mail. |
