Prodigy not following AOL's lead
The online service, along with some other Net service providers, says it will not raise rates, but will use AOL's increase to gain market share.
Prodigy Internet, a leading online service that trails AOL and Microsoft Network, announced that it is sticking with its current fee schedule, which includes both a $19.95 monthly rate for unlimited access and a $189 yearly fee that comes out to $15.75 per month.
Prodigy chief executive Russell Pillar expressed doubt that consumers would welcome the AOL price hike.
"With the service levels they've been delivering, the guys at AOL must be out of their minds," Pillar said in a statement. "We do not believe--and the customers who have joined us from AOL obviously agree--that the AOL experience merits" any extra cost.
While some ISP executives suggested that industry rates might rise on AOL's heels, players big and small denied that such plans were under way at their own companies.
AT&T and EarthLink said they had no plans to change their rates. MindSpring and Bell Atlantic said they had no immediate plans to do so, but noted that pricing was subject to change. MindSpring president Mike McQuary said he would monitor the reaction to the AOL rate hike before making a decision on changing his company's fees.
Smaller, more localized ISPs cheered AOL's decision as an opportunity for them to eke out market share from the online service, their biggest competitor.
AOL archrival MSN declined to comment.
AOL dominates the Internet service industry with more than 11 million members. But some analysts see pricing as a potential Achilles heel for the online service. Some companies, such as MCI, offer Internet service for as little as $14.95 per month, for customers that also use MCI's long distance service. And email, a primary resource for many AOL users, is available for free from an increasing number of Web sites, including, as of today, search engine AltaVista.
Reuters contributed to this report.