Internet Access Prices on the Rise

Strategic Insights -

As the demand for Internet access continues to grow, major providers are responding by hiking prices for their services. America Online (AOL), the world's largest Internet Service Provider (ISP), recently raised its prices by 10% for its most active customers. WebTV Networks, a Microsoft subsidiary, also announced a 25% price increase for its WebTV Plus service, effective June 1. AT&T Worldnet Services will redefine "unlimited access" as 150 hours a month, with customers facing a 99-cent surcharge for each additional hour. These changes may signal a shift towards tiered pricing and services, where heavy users are charged more.

Key Takeaways:

  • AOL raised its prices by 10% for its most active customers, from $19.95 to $21.95 a month.
  • WebTV Networks increased its WebTV Plus service prices by 25%, from $19.95 to $24.95 a month.
  • AT&T Worldnet Services will redefine "unlimited access" as 150 hours a month, with a 99-cent surcharge for each additional hour.
  • The new fees will affect only the most active users, who spend an average of nearly five hours online a day.
  • Some users will pay less, such as AT&T customers who choose the limited-access plan, $9.95 a month for 10 hours with a reduced surcharge.
  • AOL is beginning trials of a new high-speed Internet service, called Digital Subscriber Line (DSL), in five cities this year, offering connection speeds many times faster than current dial-up modems for a monthly fee of $49.95 plus a $150 setup fee.
  • The DSL service includes access to AOL and is less than a third of the cost charged by phone companies for DSL access in many areas.

Statistics:

  • AOL's new price is $21.95 a month, a 10% increase from the previous price of $19.95.
  • WebTV Networks' new price for WebTV Plus is $24.95 a month, a 25% increase from the previous price of $19.95.
  • AT&T Worldnet Services will charge 99 cents for each hour of access beyond the 150-hour limit.
  • The DSL service will cost $49.95 a month, plus a $150 setup fee.
  • The DSL service includes access to AOL.

Sources:

  • America Online press release: AOL Raises Prices for Most Active Customers by 10%
  • WebTV Networks press release: WebTV Networks Announces WebTV Plus Pricing Increase
  • AT&T Worldnet Services press release: AT&T Worldnet Services Redefines Unlimited Access
  • GTE Internetworking press release: GTE Internetworking to Provide AOL's Digital Subscriber Line Service