ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 19, 1996 TAG: 9612190026
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: SAN FRANCISCO
SOURCE: Associated Press
The magic number on the Internet these days is $19.95, the all-you-can-eat price almost everyone is offering for unlimited time on line. It also means busy signals, overextended phone circuits and, perhaps, the dawn of a new age.
The trend began earlier this year when small Internet service providers started offering a flat monthly rate. Then the Microsoft Network announced in November it would let users stay on line all day and all night for only $19.95.
The nation's largest Internet service, America Online, switched Dec.1, allowing its 7million customers to spend as long as they wanted logged in.
``People are staying on line on the average about 20 percent longer. The total number of hours customers are on is 3 million daily. In October, it was 1.6 million,'' AOL spokesman Steve Sigmund said.
Neither AOL nor Microsoft, which has 1.7million users, has said how many new users have signed on, or how many old ones are complaining about difficulties logging on.
Unlimited time on line is a dream come true for Net-heads, but a nightmare for phone companies.
``The average voice call lasts three to four minutes. The average Internet call lasts an hour,'' said Jim Diestel, director of advanced services for Pacific Bell.
In fact, the new pricing allows many users to just keep their Internet connection open all the time.
Keeping account holders from staying on line indefinitely is a challenge, companies are finding. Typically, if a user's connection is idle for more than 10 minutes, the network disconnects the call.
To get around that, programs with names like Stay Connected have been specifically written to trick a network into thinking a subscriber is using the connection..
Some providers, like Whole Earth Networks of San Francisco, are trying to get around that.
``As long as you're using it you can stay on. But if we see a lapse of inactivity or if your usage patterns make us think you're using one of those programs, we have tools that will scrutinize the connection,'' said David Williams, vice president of the service provider, which switched to a flat rate earlier this year.
But it's exactly this new era of flat-rate pricing - with no looking over your shoulder to check the clock - that begins to make the Internet less of a drop-in, drop-out medium and more of a leave-it-on one. If that sounds like TV, it's because Internet revenue models are looking more and more like that.
There's no way America Online or Microsoft Network can afford to build enormous telecommunication infrastructures on $19.95 a month. But if they see subscription costs as merely one portion of their revenue, it begins to make sense.
Newspaper subscription costs don't begin to cover the actual money needed to produce a daily product. But ad sales - selling access to subscribers - does.
For companies like AOL and Microsoft, which can give advertisers access to the eyes of millions of educated, fairly well-off users, it makes a great deal of sense indeed.
``We expect multiple revenue streams,'' said Ed Graczyk, product manager for the Microsoft Network. ``Customers will still be an important aspect of our revenue, but we also expect significant growth from advertising and on line commerce.''
LENGTH: Medium: 69 linesby CNB