THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Monday, February 3, 1997 TAG: 9702020009
SECTION: FRONT PAGE: A11 EDITION: FINAL
TYPE: OPINION
SOURCE: ANN SJOERDSMA
LENGTH: 85 lines
Last month, America Online's chairman Steve Case urged its logjammed subscribers to show ``restraint'' in their usage. This from a guy who makes rock-star entrances at company pep rallies wearing a black-leather jacket, faded jeans, sunglasses - and headset-wired for larger-than-life delivery.
Please. Howard Stern might as well urge clean living. In the new ``frontier'' of cyberspace, sharpshooter Case has buffaloed consumers for far too long.
If you've ignored AOL's latest fiasco, which resulted last week in the company's third legal settlement, allow me to fill you in.
In December, the national computer online service offered a sweetheart deal: flat-rate pricing. Subscribers, who had been paying monthly metered fees ($9.95 for five hours; $19.95 for 20 hours; $2.95 for each additional hour), could pay $19.95 a month for ``unlimited access.''
That's the going rate for many pure-Internet access providers - which don't organize, control or censor content as AOL does. Many consumers don't know how AOL operates. I didn't, when I joined.
The result? AOL picked up about 2 million subscribers and a whole lot of congestion. A whole lot. People ``sign on, camp on and stay on,'' as one Bell Atlantic official put it.
For weeks now, busy signals have been plaguing most of AOL's 8 million members - 40,000 of whom live in Hampton Roads. AOL can accommodate only 3.5 percent of its members at any time, compared to the industry standard of 10 percent.
Hardly what its subscribers bargained for. Or even imagined.
So Case, a former Pizza Hut marketer, began asking for restraint. He also apologized, but he didn't offer to compensate subscribers - not until a slew of state attorneys general, with false-advertising and fraud complaints, started closing in.
Unfortunately, they're letting him off easy. The AOL settlement puts the onus on consumers to request credit or refunds. More buffaloing.
The fact of the matter is, Case didn't just ``miscalculate demand,'' as industry apologists have said. He recklessly gunned for extraordinary growth from the beginning.
Case flooded the nation with AOL's free trademark yellow floppy-disk starter kits. Pick up any magazine, and the package with the pyramid fell out. Look on your airplane seat, at the video checkout counter, in your mailbox: There it was. Wow, free hours of online time without having to ask!
It wasn't long before the Dulles, Va.-based AOL passed rivals CompuServe and Prodigy; but its profits have been suspect. Through ``deferred subscriber acquisition costs'' - those free floppies - it seemed to turn bottom-line red ink black.
Last year AOL reported expenditures of about $59.89 per new subscriber, an investment it reportedly recouped after 35 months - which is much longer than most AOL members, including myself (4 1/2 months), care to stay. Once you catch on to the not-so-confusing cyberbasics, you don't need, or want, AOL to get to the World Wide Web.
You certainly don't need its e-mail brownouts, techno-glitches and customer-service busy signals. I canceled my account early on a Sunday morning. It was the only time I could get through.
Last September, the financially struggling AOL remade itself with fancier software and a heavier reliance on advertising and retail sales. A cocky Case said then: ``We believe it is our opportunity, and to some extent our destiny, to be the company that brings this phenomenon to the masses.''
Manifest destiny, '90s style.
Consumers, he elaborated, ``want somebody to make it easy and kind of hold their hand.''
They also want to pay less for more. And so Case decided to give them what they want, in order to get more of them.
In its first flat-rate plan, AOL proposed an automatic shift of its millions of subscribers, 80 percent of whom paid $9.95 a month, to the most expensive rate, $19.95.
The law didn't like this scheme, though. Washington state's attorney general ruled it deceptive. So AOL offered a choice. Still, if the consumer didn't select, the $19.95 rate would be assumed. ``Negative drop,'' it's called in the cable industry.
It now deliciously appears that the flat rate Case tried to force-feed has backfired on him. But remember - the onus is on the subscriber to demand justice.
If you're one, for your refund or credit and/or cancellation, call 1-800-827-6364; fax 1-801-622-7969; or send a letter, with your name, address, master account ``screen name,'' and phone number, to AOL Member Refunds, P.O. Box 511, Ogden, Utah, 84402-0511.
And don't be buffaloed by busy signals. On this one, you have to ride herd. MEMO: Ann G. Sjoerdsma, an attorney, is an editorial columnist and book
editor for The Virginian-Pilot.