AOL Hopes To Ring Up Upgrades
AOL Hopes to Ring Up Upgrades
Although this article doesn’t talk about pricing on the internet, it does talk about prices for internet service. How much does a normal dial-up connection cost per year?
AOL has recently raised its rate by 9% to $25.90 a month. (see aol.com for more details). The reason for AOL in doing this is to get more people to switch from dial-up to their broadband service. I think this is a good move for AOL because their number of subscribers has dropped from 26.7 million in 2002 all the way down to 19.5 million in 2005. The reason why I think this is smart is because only 6 million of these AOL users are paying for their high speed services. This leaves about 13 million subscribers left for AOL to target.
They really need to capitalize on their current customers in order to deal with their price conscious competitors like , Netzero and Earthlink. Both of these providers offer discounted starting rates which would offset the hassle of a customer changing email addresses and the rest of the service. If cost is the only issue you can get high speed internet from Netzero for only $9.95 a month when you sign up for a year. AOL has combated this by offering their service to people who already have broadband connection through their cable provider for only $14.95 a month.
AOL does hope that their image and superior software will help it keep its current customers but I don’t know if people really care about all that if they can find service for ½ the price elsewhere. So, you can get either a dial-up or broadband connection from AOL for $25.90 a month or for $14.95 a month you get the broadband AOL (which also includes 10hrs of dial up service a month- good for business travelers), but Netzero is offering a high speed broadband connection for only 10 bucks a month. Which one would you use? I think that AOL is doing the right thing by increasing dial up pricing but I think they should be more competitive in pricing their high speed internet services.
2 Comments:
I can't believe people out there are still using dial-up to access the internet. It's mind blowing really. I remember back in the day using it to get online and how angry I would get waiting for a website to load. Even worse, back like eight years ago when it would take like a half-hour just to sign on at night when everyone else in the world was dialing the same numbers on their modem to access the internet. We have certainly come a long way. I agree with what you have to say about AOL's strategy to ween people off of dial-up and attract them to broadband access. Anyone that still continues to pay the ridiculous prices of low dial-up is a fool. While AOL broadband may be more expensive than services such as NetZero, I believe AOL provides better customer and is more user-friendly for older individuals using the internet. People are also paying for a much more prestige brand name in AOL than NetZero as well.
I think it's smart that AOL is trying to be price-competitive, but I'm wondering how much longer people are going to be willing to pay for their services. Way back during the Internet boom, when everyone seemed to be going online, I feel like everyone I knew used AOL. It was convenient because it was all-inclusive--email, games, and all sorts of features in the same place. As people are becoming more Internet savvy, they know about sites like Hotmail, where we can get free email, or gaming sites that don't charge and we can procrastinate and waste time. It's great that AOL is trying to be price conscious and keep afloat, but I think they need to do something big to differentiate their services from all the other ones out there. They need to get back to the place where they were 10 years ago.
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