AOL Considering Free Online Services

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AOL/CBS
America Online, the online unit of Time Warner Inc., is considering offering its services, including e-mail, free to customers who already have a high-speed Internet connection, The Wall Street Journal reported Thursday.

Under terms of the proposal, which comes amid AOL's quickly depreciating subscriber base, AOL would no longer charge subscription fees to users with high-speed Internet access or a dial-up service from another provider. AOL customers with "dial-up" Internet access through AOL would still have to pay a monthly fee of as much as $25.90, the newspaper said.

The Journal cited unidentified people familiar with the matter for its report.

The newspaper said that AOL's total U.S. subscriber base fell by 850,000 in the first quarter to 18.6 million. At the end of 2002 the company had 26.5 million subscribers.

Nearly one-third of AOL's 18.6 million subscribers already have high-speed Internet access, and AOL expects that 8 million of its existing dial-up customers would jump on the new offer, according to the Journal. Lost revenue could be offset by lower expenses, including layoffs in the company's already troubled marketing and customer service departments.

The proposal was presented by AOL Chief Executive Jonathan Miller to Time Warner executives last week.

Shares of Time Warner closed Wednesday at $17.13 on the New York stock Exchange.