Report: AOL Considering Free Access

In an attempt to boost ad revenues, AOL is considering a plan that would give away access to its service for free to anybody who has a broadband connection. Such a move would be a serious gamble; the company would need to make up some $2 billion in subscription revenue alone.

Citing sources close to AOL, the Wall Street Journal said on Thursday that plans were proposed to Time Warner executives last week. While those who subscribe to AOL for dialup access would still be required to pay the monthly fee, those who have a "bring your own access" plan would not.

About six million of the 18.6 million AOL customers currently have high-speed access. However, the company has projected that the new plan could cause as many as eight million more to switch to the free access plans if it takes effect.

The news wouldn't be good for employees of the Dulles, Va. company, as with less of a focus on subscriptions, thousands of job cuts would be all but certain. But AOL must do something to turn around its business, with its subscriber base falling 30 percent in the past four years.

As a result of these dramatic losses, the company has made more of an effort to tear down its "walled garden." Many AOL services are now available to the general Internet public, as the company aims to sustain itself on Web advertising.

While advertising revenue is up at AOL -- now an eighth of the company's total revenue -- visitors to still are largely current subscribers, somewhat limiting the site's growth.

Thus, AOL has turned to the "free" concept. The company believes that offering the service at no charge may keep subscribers who would otherwise cancel due to the cost, as well as lure former customers back and attract new ones.

According to the WSJ, any decision is "at least weeks off." Time Warner's board has not approved the plan, and company insiders say it is a big risk. However, AOL may be left with few other choices to keep the ISP afloat, analysts say.

AOL has declined to comment on the report.

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