Telcos cash in on AOL hike
MCI Internet and GTE Internetworking are among several providers offering special rates for Net access after America Online raises its rates.
National TV commercials and ads in the Washington Post and USA Today publicized the new offer, which is bundled with the company's long distance phone service, as reported last month.
"What that boils down to when you look at our cost structure is that we're not just charging for Net access," MCI spokesman Brad Burns said today. "It's packaged with long distance. So we can afford to do this. This pricing reinforces our strategy behind MCI One, which is our fully integrated cellular and paging service."
MCI's new ads bait customers of AOL, which in February raised its prices by 10 percent from the going rate of $19.95 per month to $21.95. The rate hike goes into effect as of the April billing cycle. MCI's campaign asks, "Why Pay More?" The savings for AOL customers could be $84 per year, MCI boasts.
MCI customers will get one bill for Internet access and long distance, as well as a single support line for all their telecommunications services, the company said. The move marks the latest effort by a telco to bundle its services, a strategy analysts have long been saying will give telcos a leg up in the online access war.
Next week, GTE Internetworking will announce a new pricing plan at Spring Internet World in Los Angeles. Along with its $19.95 per month flat rate, the company will offer a new $24.95 per month premium package for consumers and small businesses, which will include extra data storage space and Web site customization services. In addition, the company will begin trials for a Net fax service.
Sprint also is testing a 10 percent discount on Internet access for customers who sign up for at least three of its services: Internet, long distance, local phone service, or paging. AT&T previously offered five hours per month of free Net access for its long distance customers, but that deal ended last summer.
MCI's plan is not a limited-time promotion, however. The company is offering an hourly plan at $5 per month for five hours and $1.50 per additional hour, as well.
Others also have been trying to cash in on potential backlash to AOL's new pricing. On Monday, Erols Internet, a 320,000-customer ISP, joined with Planet Direct to launch a month-long television advertising campaign to lure AOL subscribers with a standard $19.95 rate. And US Internet, a Minnesota-based ISP, recently launched a program called "888-Leave-AOL" for customers interested in switching from AOL. EarthLink Network, of which Sprint now owns a 30 percent stake, also started a campaign called "Get out of AOL for free."