In a deal with Kmart announced Monday, the new BlueLight Unlimited Service will provide Internet access for $8.95 per month. That price is less than the cost of BlueLight's Premium Service, which charges $9.95 a month for 100 hours of online access. Premium Service subscribers will be automatically transferred to the new service Monday.
"The ISP has always been a marketing tool only for us," BlueLight spokesman Dave Karraker said. "We have used it to get customers on to the e-store or in to the real store. This has never been seen as a revenue maker, and Kmart has decided they want to own the best value ISP for the lowest price out there."
"Americans shouldn't have to pay nearly $25 a month for the privilege of surfing the Internet and shopping online," Heidi Gibson, general manager of Internet access services at BlueLight, said in a statement.
Although Kmart and e-tailer BlueLight are touting the new service as the best value in the market, BlueLight was a free Internet service provider less than a year ago. In February, BlueLight began charging fees for the service and said it stopped providing free Internet access for customers of Costco, announced rate hikes, citing the need to accurately balance costs. Beginning in the July billing cycle, America Online customers saw subscription rates shoot up $1.95 to $23.90 a month, a 9 percent increase.
Last month, EarthLink said it would raise its monthly Internet subscription rates by $2, citing costs to launch its service feature set.
But not all ISPs have raised their prices. Microsoft's MSN said it would not follow AOL's lead, but instead launched a $50 million nationwide ad campaign designed to woo AOL customers. AT&T offers a discount, unlimited ISP service for $7.95 a month.
Last week, Kmart announced plans to buy all outstanding shares of BlueLight by Aug. 1, which follows a two-month restructuring at the e-tailer. In May, BlueLight CEO Mark Goldstein stepped down, and much of the company's marketing and merchandising duties were shifted to Kmart.