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AOL plans to grow membership

Only months after a national controversy over its jammed networks, America Online says it is ready to resume expansion.

Only months after a national controversy over its jammed networks, America Online (AOL) is telling subscribers that it is ready to start growing its membership again.

Word of AOL's plans came from chief executive Steve Case in his monthly letter to subscribers. "With our progress to date and our continued expansion of our network, the AOL community is beginning to grow again," Case wrote.

Under an agreement signed by nearly all state attorneys general earlier this year, AOL was required to halt its marketing efforts to gain new members. AOL at the time promised members it would hold its membership at 8 million. The online service had been besieged by complaints that it was so swamped that even existing members could not get online.

The agreement called for AOL to temporarily stop advertising its service, to stop soliciting for new members, and to give refunds to members for service they didn't receive.

AOL, however, did not promise to stop accepting new members. It simply said its rolls could not rise above the current 8 million level.

Because AOL's "churn"--the rate at which people come and go from the service--is relatively high, the company has been able to accept new members as older ones leave. AOL has not made public its churn percentage for several months.

"We told you in January that we would hold our membership to approximately 8 million members while we did everything possible on the access issue," Case wrote. "For three months now, that's exactly what we've done."

But now, AOL is ready to grow past the 8 million mark, Case wrote in the letter sent to members Monday and prominently displayed on AOL's opening screen.

Gaining new members is crucial to AOL's strategy, which relies on attracting the greatest number of people possible; the more eyeballs AOL can promise to advertisers, the more it can charge for ads. And AOL is depending on both advertising and monthly access fees to make a profit.

Case said the company would be "monitoring this growth very carefully to ensure continued progress and improved service for all AOL members."

And state authorities will be sure to monitor the situation as well. Representatives for the attorneys general have been meeting regularly with AOL executives and won't be reluctant to file more charges, which would mean more bad publicity for AOL's already-battered image.