Prodigy turns new Net leaf

Prodigy Internet today took aim once again at America Online with a price cut that works out to $15.75 per month for a year-long subscription.

While $15.75 pricing is available only to those who prepay a year in advance, the rate is part of a growing trend to lower access fees in the wake of AOL's decision to raise its rates to $21.95 per month.

AOL also offers a yearly subscription at a lower price: $239.40, or $19.95 per month.

Prodigy's price cut is "flying in the face of what AOL is trying to do," said Jupiter Communications analyst Patrick Keane. "It's good timing, because AOL's new rate kicks in April 1. Prodigy is going to be more successful at a cheaper price."

Prodigy was one of the first online services or Internet service providers to pledge that it would not follow in the footsteps of AOL in raising its prices. AOL last month announced it would raise its standard monthly fee for unlimited access by 10 percent, effective in the April billing cycle.

Some analysts predicted that other ISPs would follow AOL. But so far, it appears that many kept their rates the same and some lowered their rates, trying to attract AOL users.

Since then, MCI Communications and Yahoo introduced an online service package that starts out at $14.95 per month for unlimited access for the first three months and continues at that rate for subscribers to MCI's long distance telephone service. For others, the rate increases to $19.95 per month.

Prodigy's new rate is a yearly fee of $189, or $15.75 per month, which comes with a prorated money-back guarantee. Prodigy's previous year-in-advance rate was $215.40, or $17.95 per month.

In addition to the new pricing option, Prodigy announced a new channel-oriented interface designed in conjunction with content aggregator and search engine Excite. The new interface is the result of a content partnership Excite and Prodigy announced in January.

Keane said Prodigy's partnership with Excite was part of another trend of Internet service providers teaming with content aggregators. MCI's partnership with Yahoo is another example.

"Prodigy realized that programming its own front end is expensive and not very smart. You will see ISP content partnerships more and more," said Keane, citing along with MCI and Yahoo deals between ISPs and sites such as PlanetDirect and Snap. (Snap is owned by NEWS.COM publisher CNET.)

Prodigy users also will see increased availability of 56-kbps access. The online service says its 56-kbps network will reach more than 80 percent of U.S. households when completed at the end of May.

With 430,000 subscribers, Prodigy Internet trails AOL and AOL's recent acquisition, CompuServe, which together serve 13 million subscribers worldwide. Prodigy also trails Microsoft Network, which has between 2 million and 3 million subscribers, and ISP AT&T WorldNet, which has more than 1 million customers. Prodigy Classic, a $19.95 per month proprietary online service unaffected by the rate change announced today, has 400,000 members.