AOL is planning to launch a new discount dial-up Internet service under the name of AOL's Netscape unit, sources say.
The service is expected to cost $9.95 per month, compared to AOL's standard feature-rich service that costs $23.90. Reports suggest that subscribers will get just one email address instead of AOL's seven. The Netscape service is expected to launch early next year.
The news follows heavy customer losses at AOL spanning three quarters, with users flocking to lower-priced competitors and defecting to high-speed services offered by cable operators. America Online is said to have lost two million subscribers worldwide in the year ended June 30.
Guzman & Co analyst David Joyce said: "It's a way for them to retain AOL customers, but the strategy could also cut into AOL's profit margins."
With the company’s third-quarter earnings report expected on 22 October, the news could be aimed at demonstrating to Wall Street that the company plans to win back customers. But some analysts are not so certain of its impact. "If AOL thinks this will calm investors, it’s wrong – it actually makes things more uncertain," said Paul Kim, of the Kim & Co investment-research firm.
The announcement is no surprise to AOL's competitors in the low-cost market: "(Low cost services from AOL have) been in our marketing plans since day one," said Julian King, vice president of marketing at PeoplePC, the low cost services unit of EarthLink.
According to a source close to AOL, the company hopes to re-establish a buzz for its much-criticized dial-up service. But critics say that using dial-up to gain Internet access will eventually be usurped by faster broadband technology.
On Thursday, the company is changing its corporate name to Time Warner and its stock will change to the symbol "TWX."