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Punters continue to flee AOL

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AOL is still failing to stop punters from fleeing the service, the monster ISP confirmed yesterday.

Publishing the latest set of results, it reported that as of the end of December, it had 19.5m subscribers in the US - down 2.8m on the previous 12 months.

The decline in user numbers is also mirrored in Europe. Over the last year 287,000 net users have quit AOL, taking the total user base in the UK, France and Germany to 6m.

With fewer people paying for the service, revenues have been hit and fallen five per cent ($409m) on the year to $8.3bn. An increase of 33 per cent in ad revenues failed to make up for 10 per cent drop in subscription revenue.

In spite of this, operating income for the year grew 25 per cent $1.2bn.

Last week, AOL, part of the Time Warner media empire, announced plans to get more of its dial-up punters in the US to subscribe to broadband. The ISP is to expand its broadband network across the US by hooking up with the likes of BellSouth, Time Warner Cable and Verizon, and backed by an aggressive marketing campaign.

"We're starting to let AOL members know about this opportunity now to strongly encourage them to improve their online experience with a better, faster iInternet connection," said Joe Redling, president of AOL's Access business. "We've seen in recent market tests that our members respond very strongly to the ability to more simply combine what they have from AOL with what they want from a broadband connection, and now we?re going to deliver it from coast to coast."

Two weeks ago, AOL announced plans to spend £120m to provide broadband and phone services direct to UK punters, in a move that will further erode BT's dominance of the UK telecoms sector. The ISP joins a growing number of companies - including Wanadoo, Sky, Bulldog and the Carphone Warehouse - that are committed to local loop unbundling (LLU).

An initial £50m investment in LLU will see AOL install its kit in about 300 exchanges during the first half of this year - enabling the ISP to provide services to about 20 per cent of UK households. The company then plans to spend an extra £70m unbundling another 700 exchanges, giving it the chance to offer broadband and phone services to about half of UK homes. ®

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