Prodigy Raises Monthly Fee

A monthly subscription to Prodigy's Internet service will soon cost $2 more: The Internet service provider has raised its fee to $21.95. That's still less than America Online, which saw domestic subscriber growth slow after announcing a price increase in July.

Prodigy's new price, which went into effect on Monday for new subscribers and will become effective on November 1 for subscription holders, now matches monthly rates charged by EarthLink and the Microsoft Network.

A recent research report from Morgan Stanley shows AOL with 23.4 million U.S. subscribers at the end of the second quarter. That reflects an increase of 3 percent, or 699,000 subscribers, from 22.7 million in the first quarter when domestic subscriptions rose 5 percent, or nearly 1.2 million customers.

Steven Harris, senior research analyst at IDC, says AOL reported in the second quarter it had 6.6 million non-U.S. subscribers out of 30.1 million subscribers worldwide.

AOL declined to break down its subscriber numbers by market, but a spokesperson says overall growth remains strong with more than 31 million subscribers now using the service worldwide.

"AOL membership growth has never been stronger," says AOL's Jim Whitney. "In the past 12 months, we've added more than 7 million members."

AOL Holds Lead

AOL, which boosted rates in July by $1.95 per month to $23.90, retains a strong grip on the top slot in the domestic ISP market. According to IDC, AOL holds 30 percent of the U.S. market.

According to IDC's calculations, MSN is a distant second with about 7 percent of the U.S. market, or nearly 5.5 million customers. EarthLink is in third place with nearly 4.75 million subscribers. NetZero is in fourth place with 3.4 million combined free and paid subscribers. Excite@Home, whose parent company last week filed for Chapter 11 bankruptcy protection, is number five with nearly 3.3 million users. Juno is number six with 3 million, and Prodigy is number seven with 2.6 million.

SBC Communications, which owns 42 percent of Prodigy, on September 21 made an offer to buy the rest of the company. That move bucks a trend among other regional telecommunications companies, according to IDC's Harris.

"That's kind of an interesting maneuver because most of the RBOCs [Regional Bell Operating Companies] have been selling their residential subscribers," Harris says.

On the pricing front, Harris says most consumers appear to be fairly comfortable paying about $20 per month for flat-rate service.

"We've seen a couple of carriers try the add-on approach, offering this and that for an extra $2.95 per month, but that's been very unsuccessful," he says.