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How much should the Internet cost?
A couple of months ago, this burning question seemed to be settled: Most of the major companies providing access to the Internet for PC users had decided on a “single fee” system. In most of the United States, it was $19.95 per month for unlimited access to the Net.
The companies providing access were not happy with this result. These firms really want to charge an hourly fee for connections. For the customers, though, those hours add up. Before the advent of the single monthly fee, millions of people were paying $50 per month or more just to check their e-mail and surf the Web a few times each week.
The customers rebelled, and the big providers realized they couldn’t compete against rivals who offered a single “all-you-can-surf” price. The great triumph of the $19.95 era came last December when even America Online, the biggest national access provider, was forced to offer that single monthly fee.
But that doesn’t mean the pricing question is settled. AOL’s notorious problems too many users, too little capacity and the profit squeeze on many other providers suggest to many in the Internet service industry that offering customers “all-you-can-surf” is a formula for corporate starvation.
Some major access providers are dropping the formula. CompuServe, once a popular online service for ordinary folks, is tilting heavily toward business customers. Netcom, one of the pioneers of the $19.95 monthly charge three years ago, has stopped offering service at that price although existing Netcom users will continue on the flat-rate plan for the indefinite future.
Others are sticking to the single charge. The Microsoft Network, with about 2 million subscribers that’s one-fourth the number of AOL customers says it plans to stand by its $19.95 fee. AOL says the same, but given all the problems this company has faced recently, we strongly expect the company will try to add a few extra charges to the basic fee later this year. Meanwhile, some local Internet providers are going the other way, offering promotional fees less than $19.95 to lure new customers.
All this churning in the market is healthy. There is no logical reason why every company should charge the same amount for Internet access. If you are the kind of user who needs regular help from a technical rep, you ought to pay for that.
On the other hand, there are lots of accomplished Net surfers who never call the Help line. There are people who only connect to the Internet late at night, after dinner; why should they pay the same charge as somebody who wants to go online during business hours?
If you are currently paying $19.95 for unlimited Internet access, there’s a very good chance your provider will try to raise that fee by the end of this year either through a straight price increase, or by charging extra for some services (e.g., technical help) that are included in the base price now.
On the other hand, when your provider raises prices, it should be possible to find a smaller, hungrier access provider who can give you a lower price for bare-bones service.
There have also been interesting developments in the pricing of information available over the Internet. Most of the 300,000-plus sites on the Web come to us for free right now (that is, after you pay that monthly connection charge). You can read some of the world’s greatest newspapers and magazines for free, online, every day.
The publishers do not like providing their content for free, but most of them are terrified to institute a charge for fear of losing all their online readers. When USA Today’s online site started asking readers for credit-card numbers, people just stopped connecting; USA Today beat a hasty retreat, and is a free service to this day.
A major surprise in this area came last month when Microsoft’s webzine, Slate (www.slate.com), dropped its plan to institute a $20 annual subscription fee. “To be honest, we chickened out,” said editor Michael Kinsley.
“Too many people … are too cheap … to feel the need to pay extra for specific content.” This decision bodes well for Netsurfers. Slate is one of the best of the online magazines; if even this high-quality outfit cannot command $20 per year, we doubt that many others will try to charge.
T.R. Reid is Rocky Mountain bureau chief of the Washington Post. Brit Hume is managing editor of Fox News in Washington. You can reach them in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200, or you can e-mail T.R. Reid at [email protected], or Brit Hume at [email protected].
