Feeds

AOL warns of falling revs as punters flee service

Blames competition and broadband

  • alert
  • submit to reddit

Top three mobile application threats

AOL has warned that the "significant" erosion of subscriber numbers looks set to continue as the Internet giant faces stiffer competition from broadband and cheaper dial-up services.

In its annual report filed with the US' Securities and Exchange Commission (SEC) AOL reported that the number of AOL subscribers in the US fell by 2.2m in 2003, from 26.5m at the end of 2002 to 24.3m at the end of 2003.

AOL blames the decline on an exodus of punters from its service and poor uptake to marketing campaigns, as consumers opted for rival dial-up services or shifted to broadband instead.

Said the company in its report: "The AOL narrowband (or dial-up) service experienced significant declines in US subscribers, which is expected to continue. Driving this decrease was the continued industry-wide maturing of the premium narrowband business, which is expected to continue, as consumers migrate to high-speed broadband or lower-cost dial-up services."

AOL has developed several new packages, in a move to reduce reliance on traditional narrowband revenues. It has introduced a Bring-Your-Own-Access (BYOA) broadband service - AOL FOR BROADBAND - which lets users who get broadband from cable or telephone companies sign up to AOL's content service for $14.95 a month. And earlier this year it unveiled a new lower-cost, dial-up ISP - Netscape Internet Service - to compete at the bargain basement end.

Snag is, these are generating less revenue than AOL's traditional all-you-can-eat package.

As a result, the Internet company warned that the movement towards AOL broadband services "could negatively impact future results of operations due to lower average pricing on broadband services than for narrowband services."

Last year, a report by Strategy Analytics predicted as much saying that AOL could lose $1bn in revenues by 2005 because of the growth of broadband in the US.

In its report Can AOL Bridge the Broadband Gap?, Strategy Analytics argued that AOL would lose out financially as the dial-up market - which it dominates - shrinks.

Even if punters sign up to AOL's "Bring Your Own Access" scheme, the company will get less revenue.

"The combination of a shrinking dial-up market and the diminished margins produced by broadband subscriptions revenue could cost the company nearly a billion dollars by 2005," said the Strategy Analytics report.

Elsewhere, AOL's report to the SEC revealed that subscriber numbers in Europe have remained flat at around 6.4m as falls in Germany and France were offset by a growth in punters in the UK.

The average monthly revenue per user in Europe jumped from $14.88 in 2002 to $19.13 ,as a result of exchange rate fluctuations and increased tariffs. ®

Related stories

Big US ISPs set legal attack dogs on big, bad spammers
AOL launches bargain basement Net access
AOL axes 450 jobs
Broadband could cost AOL $1bn in revenue by 2005

Combat fraud and increase customer satisfaction

More from The Register

next story
A black box for your SUITCASE: Now your lost luggage can phone home – quite literally
Breakfast in London, lunch in NYC, and your clothes in Peru
Broadband Secretary of SHEEP sensationally quits Cabinet
Maria Miller finally resigns over expenses row
AT&T threatens to pull out of FCC wireless auctions over purchase limits
Company wants ability to buy more spectrum space in auction
EE dismisses DATA-BURNING glitch with Orange Mail app
Bug quietly slurps PAYG credit - yet EE denies it exists
Like Google, Comcast might roll its own mobile voice network
Says anything's possible if regulators approve merger with Time Warner
Turnbull leaves Australia's broadband blackspots in the dark
New Statement of Expectations to NBN Co offers get-out clauses for blackspot builds
Facebook claims 100 MEEELLION active users in India
Who needs China when you've got the next billion in your sights?
Facebook splats in-app chat, whacks brats into crack yakety-yak app
Jibber-jabbering addicts turfed out just as Zuck warned
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.