AOL Mulls Free Broadband Services
By Geoff Duncan
July 06, 2006
Media reports have AOL considering letting broadband users have free email and other services, just so more eyeballs see its online ads.
According to reports in the Wall Street Journal and (now) elsewhere, online titan AOL is considering letting Internet users who already have broadband connection use its online services—including email—for free. As AOL's subscriber base continues to diminish, the move is seen by analysts as a way to increase the number of people using AOL's online services: what the company loses in subscriber fees, it hopes to make up for (and then some) through increased revenue from online advertising.
According to the Wall Street Journal, AOL's subscriber base declined by some 850,000 during the first quarter of 2006, to a total of just 18.5 million—roughly equivalent to the company's subscriber base in 1999. In contrast, the company claimed 26.5 million subscribers at the end of 2002—the same year it reported a staggering $99 billion loss.
Dial-up subscribers—which still make up roughly half of U.S. Internet users—would still have to pay to use AOL services. AOL has attempted to move dial-up subscribers to broadband connection by increasing access fees for dial-up users; now, the company hopes it may be able to convert as many as 8 million dial-up subscribers to ad-viewing monsters by offering broadband users free services.
If implemented, the move would follow on the company's recent partnership with Google, announced in late 2005, which stands as perhaps the premiere example of an Internet company succeeding marvelously on advertising dollars. However, it's unclear whether AOL could successfully convert to an ad-based revenue model even with Google's assistance.