US subscribers desert AOL

The number of America Online (AOL) users has fallen for the first time in 10 years.

US subscribers to the online division of AOL Time Warner fell by more than 170,000 in the last three months of 2002 despite the glitzy release of its latest software, Version 8.0.

The company reported a loss of $99bn (£60bn) for 2002, a performance that led to the resignation of CNN founder Ted Turner from his post as vice chairman and the news that chairman Steve Case would also step down.

But analysts believe that the drop in subscribers could foreshadow an even gloomier future for AOL. Many suggest that the reason for the drop has been the company's slow transition to high-speed broadband after its long domination of the dial-up market.

Research figures have shown that AOL holds slightly fewer than one in three US dial-up subscribers, but just one in 30 broadband accounts.

AOL believes its loss of US customers is a minor blip rather than the start of a major downward trend.

Surprisingly, the release last October of its latest software seemed to have no effect on its subscriber numbers. When Version 7.0 was released in October 2001 the company gained an extra two million users within months.