Many America Online subscribers are in for a surprise when they get their next credit-card bill.
The company adopted a new flat-fee structure in December, and unless users opt for another plan, they'll be switched to a $19.95 per month rate automatically. The new rate includes unlimited Internet access.It's the latest gyration from traditional online services as they integrate the Internet into their services and pursue what one analyst calls the "mythical mass consumer market."
For weeks America Online, which has 7 million subscribers, flashed a message about its new flat-fee rate as users logged on to its service. It also mailed flyers to subscribers over the past week touting the "unlimited pricing" plan.
But that may not be enough to avoid the wrath of consumers who missed or ignored the announcements - or scrutiny by state consumer protection agencies.
Switching customers to higher-price plans by default is a no-no under many state consumer laws, including Utah's.
"It looks to us on first blush that that would be in violation of our negative option clause," said Kim Morris, spokesman for the Utah Department of Commerce. "That is where they may be in trouble. We as consumers have to take that step to avoid negative impact on our wallets.
"Even if it doesn't, I don't think that is a great way to do business - something happens unless you're aggressive about preventing it," he said.
The department may not pursue any action, though. It has had no consumer complaints about America Online switching customers to a new rate and only one media inquiry.
Still, the approach turned off some subscribers who immediately called to cancel their accounts.
"That has caused some of my friends to choose option Z, which is bye bye," said Morris, who also joined the ranks of former America Online subscribers.
Which may be a hasty reaction to a bad way of offering a good deal.
America Online's new rate is in line with what most Internet service providers charge for unlimited Internet access. But they don't offer all the other things that America Online does: the chat groups, conferences, categorized content, etc.
"We think we have the best service, and now we have competitive pricing as well," said Michael Gross, spokesman for America On-line.
A lot of Internet users snub their noses at such stuff. But for mainstream consumers, organized content is a draw, particularly until they become adept enough on the Internet to go it alone on a no-frills service.
America Online and other traditional online services are often "training wheels to the Internet. Folks learn about it there and then graduate to a real ISP (Internet service provider) where they pay $20," said Steve Outing, president of Planetary News, a consulting firm in Boulder, Colo.
"I'm glad to see AOL adopt that price structure," Outing said. "For a lot of folks it's a much better deal. It was a good move. AOL's way of handling it was not so good."
America Online, in fact, expects time subscribers spend online to soar and is adding more equipment to handle increased demand.
The challenge for AOL, as well as companies like CompuServe and Prodigy, is hanging on to their subscribers, particularly as more people become comfortable with using the Internet and realize they can find the same information on the 'Net.
"Simply providing Web access won't be enough," said Bruce Gup-till, research director over electronic commerce and Internet strategies for the Gartner Group. "What they have to provide is real utility for everyday users."
What he means is they must make connecting to the Internet seamless, allow users to customize the information they receive and provide safe havens for online commerce.
"The problem is they are all aiming at consumers," Guptill said. "One thing we've found is there is not a huge consumer market yet. We call it the `mythical consumer market'. There will be, but now and for the next couple years, most people who use computers and need information are business users."
CompuServe found that out, he said, with its failed WOW! service, which it announced seven months ago and will fold in January.
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ADDITIONAL INFORMATION
6 options for America Online subscribers
The "unlimited pricing" plan is actually only one of six options America Online is offering subscribers, including some that are much cheaper. If you've relied on America Online mostly for e-mail and other services rather than Internet access, check them out.
Subscribers can choose to:
- pay $9.95 per month and receive five hours access to America Online services, including the Internet; additional time is $2.95 per hour;
- pay $9.95 for unlimited access to America Online but use another, private Internet service to surf the Net via AOL;
- pay $4.95 per month for three hours of access to America Online services, including the Internet; additional time is $2.50 per hour.
They can also prepay for a two-year subscription to America Online at the rate of $14.95 per month or a one-year subscription at $17.95 per month.
Subscribers currently paying $9.95 per month who get switched and don't like it have 90 days to contact America Online and request to remain on that plan.
To change your account plan, call 1-888-265-8888 or, online, choose keyword "new pricing" and then click the sign-up icon. Choose the plan you want and you'll automatically be set up on it. To cancel your account, call 1-800-827-6364.