AOL has confirmed that it will discontinue its CompuServe 2000 and Netscape Online pay-as-you-go services in June.
The internet service provider (ISP) revealed in September that it would gradually phase out Netscape Online. This week's announcement provided more details about the time scale and terms of the closure.
Without Netscape Online, AOL is the only major consumer ISP in the UK that does not offer a pay-as-you-go package.
Rival Freeserve offers both a flat rate and pay per use option. The company reported a customer base of 2.42 million users in January, of which 1.74 million use the pay-as-you-go No Ties service.
A spokesman for Freeserve said: "We believe there is life in pay-as-you-go, particularly as an entry-level product for internet newcomers."
But Matt Peacock, chief communications officer for AOL UK, disagreed. "The pay per use model for internet access is fading away," he said. "Netscape Online customers' future requirements are best met by AOL."
He added that CompuServe 2000 users will also be better served by AOL. CompuServe 2000 does not offer a flat rate fee or broadband package.
Providing a flat rate service is more cost effective for AOL. Helen Omwando, an analyst at Forrester, explained that AOL is cutting its losses by dropping Netscape Online.
Pay-as-you-go customers require a high level of subsidy, and even a flat rate dial-up service is costly to run.
"Flat rate access must be offered at a favourable price, but this still doesn't cover the complete cost of running AOL's service," said Omwando, insisting that encouraging customers to move to broadband access would be more cost effective.
The Netscape portal and browser will be unaffected, as will CompuServe Classic, the older version of CompuServe.
All Netscape Online and CompuServe 2000 users will be offered a free trial of AOL's flat rate service until the end of June.
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