The price hike, effective June 1, raises the fee for WebTV Plus Network service from $19.95 per month to $24.95 per month, according to the company, which is owned by Microsoft. Users who register for WebTV Plus service before June 1 will keep the $19.95 rate until January 1, 1999.
The price for WebTV Classic service will not change.
The announcement comes the same day that ISP AT&T WorldNet said it would cap access for subscribers of its $19.95 monthly rate at 150 hours, beyond which they will have to pay an additional fee per hour. Both companies follow online giant America Online's announcement last month that it is raising its monthly fee from $19.95 per month to $21.95 per month. That rate hike goes into effect tomorrow.
WebTV Networks says its customers use its service 70 percent more than subscribers to PC-based online access services, staying on an average of 41 hours per month. However, it also partly blames the features that cause the greater usage for the rate hike.
"We are encouraged by the enthusiastic reaction to WebTV Plus, although the features that have led to such high usage are unfortunately more costly to deliver than simple Internet access," Steve Perlman, president of WebTV Networks, said in a statement.
Specifically, along with purchasing the set-top box, users can sign up for Internet access through WebTV Networks. The access is actually provided via outside ISPs.
WebTV also supplies additional features such as interactive TV listings or "picture-in-picture" viewing, which allows users to watch television and surf at the same time.
The additional fees announced today will not be passed on to the ISPs, according to Bill Keating, senior vice president of WebTV Networks. He said the additional costs to the company are not related to Net access; rather, the TV-based services WebTV offers are responsible.
The rate hike is "a result of incremental TV costs, not incremental ISP costs," he said, adding that the ISPs that work with WebTV receive fixed rates based on the number of users or the number of ports involved, depending on the individual ISP.
Keating noted that although many ISPs are raising their own rates, those that work with WebTV simply provide access, not services, so there is "no cost of customer care" for them. "Basically, we are just buying connections from them," he said.
Users who don't want access via WebTV can use the OpenISP option, under which they choose an ISP outside the WebTV plan. The WebTV add-ons cost an additional $14.95 per month for WebTV Plus, or $9.95 for WebTV Classic, along with the ISP's fee--making that "option" much more expensive than WebTV's own access plan, even with the rate hike.
Moreover, with WebTV Plus, users are required to pay the additional fee for the WebTV features, whereas with the Classic box, users can choose the OpenISP plan and forgo the WebTV features and their associated cost if they choose.
Along with the rate increase, WebTV announced an upgrade to its WebTV Plus service, due this summer, which will include TV and VCR integration, personalization, searchable TV listings for the week, and multimedia email.