AOL Discontinues Bundled Broadband Offer - InformationWeek

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AOL Discontinues Bundled Broadband Offer

It's now requiring subscribers to provide their own high-speed connection via DSL or cable modem.

NEW YORK (AP) -- America Online Inc. has quietly stopped offering a complete broadband package, requiring subscribers to instead obtain their high-speed Internet connections directly from a cable modem or DSL provider.

The reversal in strategy stands as another black mark against the purported wisdom of the $160 billion merger between America Online and Time Warner at the height of the Internet boom, a deal the companies had described as a perfect marriage of new and old media with the means to deliver it.

The decision to stop selling bundled service--an AOL-branded cable or DSL connection combined with AOL's walled garden of content--follows a strategic realignment that began in December 2002, AOL spokeswoman Anne Bentley said Friday.

The change, which took effect late last month, does not affect customers who bought the package before then.

Although AOL would not provide a detailed breakdown, relatively few of the company's 3 million broadband subscribers had the $54.95-a-month package. Most had AOL's "bring your own access" service for $14.95 a month and obtained access separately, Bentley said.

In addition to the broadband customers, AOL has about 21 million dial-up subscribers in the United States.

Dave Burstein, editor of the online DSL Prime newsletter, termed the termination of bundling an admission of defeat.

Microsoft Corp.'s MSN online service also withdrew from selling broadband access last year, though customers can buy a bundled access-and-content package directly from partners Qwest and Verizon.

Burstein questioned whether that many more customers would want to buy AOL content on top of access from another provider.

"Selling access, you had to buy something from them," Burstein said. "That was a real service. ... Now they are essentially another Web site."

But Bentley said uncoupling access from content permits nationwide marketing of "AOL for Broadband," a service with richer audio and video content for high-speed.

Before, AOL could offer bundling only in select markets, primarily areas served by sister company Time Warner Cable and a handful of DSL companies with which it had deals.

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