United Online cuts off some paying customers
The company says it has stopped providing Internet service to some paying subscribers, citing the cost of telecommunications services in some areas.
The Internet service provider, formed earlier this year through the merger of NetZero and Juno Online Services, said it sent termination notices to "a small percentage" of paying subscribers Friday.
"Based upon certain factors, including the cost of telecommunications services in (those customers') area and their pattern of usage of our service, it has become cost-prohibitive to continue providing their current service," the company said in a statement.
A company representative would not disclose the number of people affected. The representative said United Online has 1.25 million paying subscribers out of 6.1 million active users; the remainder use free versions of the services. The company does not break out figures for NetZero and Juno services.
The move comes as ISPs struggle to overcome financial difficulties that have left many consumers on hold. On Saturday, thousands of AT&T subscribers temporarily lost access to their high-speed connections after the company terminated its contract with Excite@Home, which filed for bankruptcy last month.
Last year, AltaVista terminated its free Internet access service. Other free ISPs, including Freewwweb and WorldSpy, have exited the business entirely.
"Just being an ISP itself is very expensive," said Jarvis Mak, an analyst at Nielsen/NetRatings. "Three or four years ago, there was an abundance of (free services, but) eventually they died out just because the costs were too prohibitive."
Juno and NetZero, two of the biggest free ISPs before their union, were among those looking to control costs. Mak noted that NetZero saw a small percentage of free users "eating up large chunks of bandwidth" and becoming its costliest customers. As a result, both companies placed strict limits on the amount of time people could spend online; Juno also pushed free subscribers toward paid services.
United Online said subscribers affected by Friday's termination notices have been given 30 days to establish service with another ISP. The company said it will automatically refund to affected subscribers any unused service for which they had previously paid.
After 30 days, United Online plans to automatically shift subscribers' addresses to the company's free service if it is available in their area. In locations where the free service is unavailable, the company said customers will no longer be able to view saved e-mail after the deadline.