AOL May Make More Services Free

10 July 2006

Struggling US internet giant AOL is mulling plans to provide more of its services free as it attempts to beef-up its broadband offering and distance itself from dial-up subscribers.

The Time Warner division aims to transform itself into an advertising-fuelled portal such as Yahoo or Google. The company's plan would sweep away charges for subscribers who have broadband or those who get a dial-up service from a rival provider.

More than one-third of its 18.6 million customers would stop paying for access, resulting in a $2 billion (€1.56bn; £1.08bn) fall in annual revenue. However, AOL says part of the cost would be offset by job cuts in the group's sales and marketing departments.

The online firm has been steadily losing subscribers since they peaked at 26.7m in September 2002, since when it has seen a mass exodus to cheaper broadband competitors.

TW ceo Richard Parsons, says an AOL revival is a priority to boost the company's languishing share price, which last year led to a battle with a group of activist shareholders led by Carl Icahn [WAMN: 12-Oct05].

Data sourced from Financial Times online; additional content by WARC staff