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AOL to recruit members again

The online service is planning to expand its membership only months after a national controversy over its jammed networks.

America Online (AOL) is planning to grow its membership again only months after a national controversy about its jammed networks.

Word of AOL's plans came from chief executive Steve Case in his monthly letter to subscribers. The letter--sent to members Monday and prominently displayed on AOL's opening screen--said the company is now ready to grow past the 8 million mark. AOL had promised attorneys general in nearly every state to hold its membership to 8 million until it could guarantee service for existing members.

Lori Corral, a spokeswoman for the Illinois attorney general, said that her office will closely monitor future growth.

"We'll watch them grow and we'll see what happens," said Corral, whose office led negotiations between the online service and several state attorneys general earlier this year. "We're going to continue to monitor the situation."

The plans drew immediate criticism from at least one AOL subscriber. "AOL is not even close to being ready to resume expansion! Here in Miami, Florida, I still get a busy signal nine out of ten times!" AOL member Alex Cuervo wrote in an email responding to a report by CNET's NEWS.COM yesterday. "Since the news broke out that it was ready to expand, it is now ten out of ten busy signals. Something is wrong here! AOL is only ready to start receiving more class-action suits."

Under an agreement signed by nearly all state attorneys general, AOL was forced to halt its marketing efforts to acquire new members for one month. At the time, AOL also promised that it would hold its membership at 8 million in response to complaints that even its existing members could not get into the swamped network.

The state agreement called for AOL to temporarily stop advertising its service, to stop soliciting for new members, and to give refunds to members for service they didn't receive.

AOL, however, did not promise to stop accepting new members. It simply said its rolls could not rise above the current 8 million level.

Because AOL's "churn"--the rate at which people come and go from the service--is relatively high, the company has been able to accept new members as older ones leave. AOL has not made public its "churn rate" for several months.

"We told you in January that we would hold our membership to approximately 8 million members while we did everything possible on the access issue," Case wrote. "For three months now, that's exactly what we've done. With our progress to date and our continued expansion of our network, the AOL community is beginning to grow again."

Gaining new members is crucial to AOL's strategy, which relies on attracting the greatest number of people possible; the more eyeballs AOL can promise to advertisers, the more it can charge for ads. AOL is depending on both advertising and monthly access fees to make a profit.

Case said the company would be "monitoring this growth very carefully to ensure continued progress and improved service for all AOL members."

Indeed, so will state authorities. Representatives for the attorneys general have been meeting regularly with AOL executives and won't hesitate to file more charges, which would mean more bad publicity for AOL's already-battered image.