The decision by America Online (AOL) to raise its monthly rates from $19.95 to $21.95, beginning with its April billing cycle, had many analysts predicting other internet service providers (ISPs) would soon follow suit. Instead, some service providers are choosing to lower their rates, in hopes of snatching some of AOL’s customers‹and perhaps your schools. Some 21 percent of the nation’s schools use AOL for internet connections.
AOL’s move could be good news for schools, according to Kate Delhagen, senior analyst with Forrester Research. “I expect we’ll see a flurry of competition now,” said Delhagen. “We’ll look back on this as a turning point when some of the local [telecommunications companies] got serious about getting consumers online.”
Several companies are looking to lure unhappy AOL customers. U.S. Internet, a Minnesota-based ISP that boasts tens of thousands of customers, has launched a program called “1-888-LEAVE-AOL.” EarthLink Network Inc., is countering with a “Get Out of AOL Free” campaign.
As the nation’s largest internet access provider, AOL was already a target for marketing campaigns by the competition. But the online service giant alienated many of its customers by raising rates while its empire continued to grow.
AOL claims its price increase is necessary to keep pace with the rising costs of its members’ usage. “Our expanding members have told us‹and their usage demonstrates‹that they want us to continue to provide AOL on an unlimited basis,” chief executive officer Steve Case said in a statement. “The price changes…will help AOL continue to make the necessary investments to provide the best possible online experience.”
Telecos could ultimately have the advantage in the pricing war, because they can offer bundling deals for their customers that other ISPs cannot. MCI long distance customers, for example, can have unlimited internet access for $14.95 per month.
U.S. Inernet Leave AOL