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AOL cuts prices but won’t go free

It’s about the quality of the service, apparently

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AOL is being squeezed so hard by the growing competition in the UK ISP marketplace that it is starting to black out and become confused and disorientated. Today it announced that as of 1 June, the cost of unlimited access to AOL will be cut to just £9.99 -- down from £16.95 a month. Announcing the new pricing plan, Andreas Schmidt, president and CEO, AOL Europe, said subscription-based Net access was the "only sustainable model to achieve long-term growth in the UK and throughout Europe." Yet only last week it emerged that AOL UK was trailing different pricing structures including one that could include toll-free access. This appears to be in stark contrast to Schmidt's declaration and appears to show that far from having a grasp of current market thinking, AOL's strategy is muddled and confused. Its decision to cut the cost of accessing the Net in the UK still falls far short of other Internet access providers who have abandoned subscription fees. If, as it maintains time and time again, people are prepared to pay through the nose for its service because of its "unique offerings", today's decision to cut it's subscription only adds to the confusion. It can only be taken as yet another sign of the immense pressure AOL is facing, something that has been said time and time again by Net watchers. Even with this price cut, AOL users still have to fork out £120 a year when other online service providers, such as LineOne and Virgin Net, are now offering their services for free. Yet according to AOL, the new plan will help drive up membership and use of the service. It will also "accelerate the development of a multiple-revenue stream business model that further positions the company for sustainable leadership in the UK market," an official statement said. AOL UK president and MD, David Phillips, said: "With our new £9.99 unlimited use plan, AOL UK is once again demonstrating its commitment to providing consumers the best value for a superior online experience. "The UK market is poised for enormous growth, and we believe this new unlimited use plan will attract new members and encourage existing members to take advantage of unlimited access," he said. The Register disagrees. However great the content, the subscription-free model is here to stay. Net users will vote with their feet unless AOL UK realises that the pricing model that has worked so well for them in the US is doomed to fail in the UK and Europe. ®

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