With online activity surging, the inevitable has begun. Demand is growing, and the costs of connecting to the Internet and staying in touch are increasing. First, America Online, the No. 1 Internet service provider, raised prices. Last week, EarthLink, the second-largest in the field, raised prices.
Put simply, we’re hooked on the Internet, and ISPs are in position to go for profitability. But from the consumer’s point of view, the good news is that there are alternatives and they increase daily.
Although some people in search of the latest technology are making the jump to high-speed service through cable modems and phone companies’ digital subscriber line connections, at a cost of $40 to $50 a month, others are looking for a cheaper way out.
For the first time in a while, old hands at surfing are looking to alternatives such as free Internet connections. Many are also spending less time online, choosing basic dial-up plans instead of those that offer unlimited access.
Others are taking a look at “Internet devices” as alternatives to the conventional use of a laptop or personal computer to get online. An example is the BellSouth Mailbug, a 2-pound keyboard machine that handles e-mail and fetches basic information such as weather forecasts, headlines and stock quotations.
The bad news is that the freebie route to full Internet access has failed economically, with only a few national companies remaining.
“We spent months examining a possible free service, but we could not find a way to make money from it,” said Mike McQuary, president of Atlanta-based EarthLink and former senior officer of MindSpring, which merged with EarthLink in 1999.
Companies have had little luck making money giving away their services, as one free service after another has left the field, leaving it mostly to the recently merged combination of providers NetZero and Juno.
Though some experts speculated that EarthLink, trying to capture fleeing AOL customers, might hold the line on prices, that was not the case.
The nation’s No. 2 Internet service provider raised its prices on all-you-can-surf service from $19.95 per month to $21.95, effective this month for new customers and next month for people who are already signed up.
EarthLink will still be about two dollars cheaper than industry leader AOL.
McQuary has said the company did not expect a rush of AOL customers after that company’s price increase because of the loyalty and branding AOL commands.
So what can cost-conscious Internet consumers do?
The first step, experts say, is to look at the number of hours you spend online and see if a lower-cost plan on your existing service can meet those needs.
The premium plans in the $20 to $25 range include unlimited time online, often several mailboxes to accommodate family members and the possibility of building a Web page.
But many consumers newcomers and veterans whose needs have changed can do with less.
“If you think you’re paying too much for a premium service like AOL, remember there are plenty of mid-tier offerings out there,” said Rob Lancaster, an analyst with the Yankee Group.
“One effect of the AOL price change very likely will be a slide to lower-priced tiers of service, at price points like $14.95 and $4.95, depending on the needs of customers,” said Joe Laszlo, an analyst with Jupiter Media Metrix.
Customers would do well to shop around.
For example, AT&T; Worldnet offers 150 hours of dial-up service for $4.95 per month. If your interest runs to little more than exchanging e-mail, AOL has plans for three hours online a month for $4.95 and five hours for $9.95.
CompuServe, an AOL subsidiary, offers 20 hours a month at $9.95 a month. And Prodigy, an online service pioneer, offers unlimited service at $16.50 a month if customers make the $198 annual payment in a lump sum.
“The average family spends only 35 to 40 hours online per month,” Laszlo said, “so the lower-priced tiers will work for many people.”
The potential drawback to using a plan with limited hours, however, is the high cost of overruns. Extra hours can cost as much as $2.95 apiece.
NetZero, the biggest free service, details its offerings at www.netzero.com.
The company provides 40 hours of free service a month, though users have to put up with advertisements that blink across their field of vision.
The service offers a free e-mail account, customer service and access numbers that can be used nationwide.
For customers who find the ads too aggravating, NetZero offers a paid plan that includes unlimited, banner-free service for $9.95 per month.
