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AT&T bumps Web surfers to pricier ISP

The communications company is shutting down its low-cost Internet service provider and will move customers to a more expensive plan that allows for fewer hours.

AT&T said Monday that it will shutter its low-cost Internet service provider, saying it was unable to subsidize access costs with advertising dollars.

Launched in July 2000, the i495 service was AT&T's contribution to the assortment of free and low-cost Internet services. The ISP offered 150 hours of Internet access a month for $4.95 but required subscribers to accept a persistent advertising banner while using the service.

Beginning Jan. 4, 2002, i495 members will be switched automatically to a plan that provides 50 hours of Internet access a month for $10.95. The ad bar will be removed.

AT&T is also offering incentives for i495 members to switch to its pricier WorldNet ISP plans. Subscribers who switch to WorldNet's 150 hours-a-month plan, which costs $16.95 a month, will receive a $25 gift certificate redeemable at online retailer Amazon.com.

"What we found is what everyone else has found--the advertising market has softened significantly," said Janet Wyles, an AT&T spokeswoman.

Over the past year, many free ISPs have gone out of business or consolidated after the online-advertising market collapsed. Wyles said that for AT&T, using advertising revenue to supplement access fees became an unreliable model.