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MCI cuts unlimited Net access

The company is no longer offering unlimited Net access to new users--including those who sign up for Yahoo Online.

MCI Communications is no longer offering unlimited Net access to new users--including customers who sign up for Yahoo Online, the two firms' cobranded Web-based online service.

"We want to be sure we can keep customer service and Internet service at the same level, and support our continued growth," said Kelly Seacrist, an MCI spokesperson.

The move follows a similar one by MCI rival AT&T's WorldNet service in March. AT&T announced it would begin limiting the hours for its flat $19.95-per-month fee to 150 on May 1. The firm noted that the change would only affect 3 percent of its customers--those who used a disproportionate amount of network space. AT&T said it would charge users 99 cents per hour past that time, and was introducing the extra charge to keep its flat fee at $19.95 per month for the other 97 percent of its customer base.

Seacrist said MCI also expects the new policy to affect 3 percent of customers.

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The move by MCI and AT&T is the beginning of a trend for telcos and other ISPs to charge their heaviest users, according to Kiran Narsu, director of research for the Giga Information Group.

"The heavy users are definitely on the increase," he said, noting that they are mostly "small-business users, independent contractors, and work-at-home professionals.

"Those are the users who stay online all day--they need that email and access," he added. "The only way to police this is to charge for it."

Along with the trend toward increasing fees for heavy users, he said, "There's going to be more aggressive idle-time connection cutoffs."

MCI Internet and Yahoo Online customers pay $14.95 per month for the first three months of service. If they are not MCI long distance phone service customers, the rate jumps to $19.95 per month after that. Now, similar to WorldNet, users who stay online more than 150 hours per month will be charged 99 cents per hour. Seacrist added that the firm has no immediate plans to change its current monthly rates.

The new MCI policy goes into effect for all customers August 1. They will be notified via email and on their billing statements, Seacrist said.

Yahoo Online instituted the policy this week. Customers who signed up before Monday are not affected by the change until July, the firm said.

Internet service providers have faced a challenge in the crowded Net access sector. On one hand, they have to keep the cost to customers low to stay competitive--but on the other hand, analysts have noted the $19.95-per-month flat fee model might not be realistic for the long term as costs rise. Telecommunications firms such as MCI and AT&T stand a better chance, however, because they can bundle services and offer special discounts, such as MCI's access-and-long-distance deal.