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Will AOL Subscribers Defect

Boot Camp feature for Thursday, May 31, 2001

Will AOL subscribers defect? Bloomberg Bootcamp, a report on today's technology. America Online is gambling that by raising its rates... it will add to its bottom line. As of July subscription rates will go up to 23.90 a month, an increase of a little less than two dollars. At Microsoft... the reaction has been swift... ..

"We saw a very large spike in our customer service lines the day that AOL announced a price increase so we know that consumers are interested in looking for an alternative."

Bob Visse is the group product manager for Microsoft's MSN service. With about five million subscribers... it is the number two Internet service provider in the U.S.. AOL has more than five times the subscriber base. Microsoft wants to make those subscribers an offer that's hard to resist...

"Consumers can call 1800-FREE MSN or go to MSN.com and they can sign up to get three months of MSN for free and then they can lock in their price until the end of 2003."

Microsoft is planning a fifty million dollar ad campaign ... but Visse tells us... there's been no decision yet as to whether it will target AOL by name. MSN may be able to make a bit of a dent in the AOL juggernaut... .but in many families, I suspect kids are the key decision makers when it comes to choosing an online service. And as long as their friends and classmates are just about living in AOL chat rooms... ..MSN... cheaper or not... .will be a tough sell. Bloomberg Bootcamp, I'm Fred Fishkin.