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AT&T, Sprint rethink Net pricing

AT&T and Sprint are planning key changes in their pricing for Net access.

AT&T (T) and Sprint Communications (FON) are planning key changes in their pricing for Internet access in a bid to maximize revenue from their services.

In an announcement today, AT&T said starting in April it will raise prices for some customers of its WorldNet access service, but will promise more reliability in exchange. This includes posting statistics on the Web that compare the reliability of its service to that of other ISPs.

"Customers want assurances of fast, reliable access to the Internet so we're tracking our results and challenging other service providers to match them," said Tom Evslin, AT&T WorldNet service vice president.

AT&T will start charging its long distance customers $4.95 per month for the first five hours of Net access and $2.50 for each additional hour, as previously reported by CNET. The company now offers the first five hours for free, but that promotion will end March 31 after having been extended from December.

The new rates are similar to what America Online charges for a similar light-usage plan.

Flat-rate pricing is still available, and AT&T is offering incentives for light-use customers to adopt the "all you can eat" option. Customers that switch to the $19.95 unlimited usage plan will receive their third month of service free if they sign up by April 30.

Sprint, the nation's third-largest long distance carrier, has not finalized any changes in pricing, but it is expected to move away from its $19.95 "all you can eat" pricing for its Internet Passport service, by year's end. "Nobody's married to $19.95," company spokesman Jeff Shafer said.

No decision has been made, but options include tiered pricing, such as "premium service," for a less crowded, more reliable network. Sprint, which has 60,000 customers, also might charge a premium for users who keep their connections open all day.

The pricing changes by both AT&T and Sprint reflect difficulties encountered by Internet service providers in making enough money under their current pricing strategies. The goal is to even out time of usage among all its customers; currently, it is weighted toward too many heavy users. Net service providers want a system much like that of cable TV, where customers pay for what they use.

Some ISPs have already changed their pricing structures. Netcom, for example, is expected to raise its rates as early as next month and focus on small and medium-sized businesses. AT&T's plan is less drastic, it still is targeting homes as well as businesses.

In terms of increased reliability, AT&T will stress the size and strength of its backbone. It also is continuing to add more local access numbers for customers. The company also agreed to forward customers' email if they decide to leave AT&T for another ISP.

Last November, AT&T said half of its Internet users were hit by an email problem that halted message delivery for more than 24 hours. It attributed the problems to hardware failures in the database service.

AT&T has been offering WorldNet for about a year. The service has more than 750,000 customers.