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AOL Strategy Shift

19 Apr, 2002 By: Hive News

AOL Time Warner is rethinking its broadband strategy because of rampant customer defections from America Online (AOL) dial-up service.

When the companies merged the value proposition was to market AOL broadband service over a variety of cable companies' lines, but Time Warner was the only taker. Sticking points in discussions with the top 10 cable operators have been advertising revenue generated from high-speed access business and who “controls” the customer, according to The Wall Street Journal.

As a result, AOL has trouble convincing its subscribers to pay the $23.90 monthly access fee on top of a fee that averages $40 per month for cable, satellite or digital subscriber line (DSL) service. Customers that sign up with a non-Time Warner broadband provider are dumping AOL and the incessant advertising messages its customers receive.

The strategy shift has AOL sales reps trying to persuade customers who sign up for competing broadband service to hold onto AOL when they do.

AOL is the worst performing unit in the Time Warner AOL portofolio, putting drag on the entertainment and cable units. Its stock has been hovering around a pre-merger low of $20 per share.

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