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AOL Rate Hike Ignites Internet Service Price War

Exploiting AOL's $2 price increase, ISPs from MindSpring to MCI are courting customers with "Escape AOL" price-break campaigns.

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Internet users everywhere should be breathing a collective sigh of relief. By the time you read this, America Online--with 11 million subscribers, the king of the ISP hill--will have raised its monthly subscription rate from $19.95 to $21.95. In the wake of the announcement, many observers expected competitors of all sizes to quickly follow suit, raising the price of Net access for everyone.

But that's not what happened. In fact, since the AOL rate hike, most ISPs are holding fast to the magic $19.95, some have even lowered their monthly rates, and many are aggressively pursuing what the industry calls AOL graduates: online users who learned to surf in AOL's placid waters and who are now looking for faster, cheaper, and more reliable Net access.

This heated competition is a boon for online consumers. Shop around, and you can find Internet access for well under $19.95 per month--particularly if you spend a limited amount of time online or if you're willing to pay for a year up front.

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