The AOL List: Money for Nothing

David Cassel (
Thu, 30 Jan 1997 01:32:55 -0800 (PST)

			M o n e y   f o r   N o t h i n g


AOL members can receive a one-month refund by sending their name, address,
master account screen name, and phone number to AOL Member Refunds, P.O.
Box 511, Ogden, Utah, 84402-0511. 

Alternately, customers can receive up to two months by calling
1-800-827-6364, depending on the number of hours they were able to connect
to AOL and the pricing plan they'd selected. 

Steve Case seems confused.  He told CNBC Friday that the company was not
considering refunds.  Wednesday he told Reuters that AOL had planned on
issuing refunds all along, and "If there hadn't been so many states
involved, we could have responded a few days ago."  Case isn't the only
one confused.  A statement issued by California attorney general Dan
Lungren gives a different P.O. Box, and says the default refund is only
one free month of access.  (This would address complaints of bad service
by--offering another month of it!)

According to the attorney general's statement, AOL agreed to cap
membership at 8 million members, and not to advertise in February (with
exceptions for software which has already been packed in magazines and
computers.)  And beyond February, AOL "cannot advertise unless it
maintains sufficient network and system capacity to meet reasonably
expectable public demand," the attorneys general insisted--but then added
that advertising was acceptable if AOL applied the 8-word disclaimer
"Availability may be limited especially during peak hours." 

Anticipating the most significant concern, the negotiated settlement
stipulates that AOL "shall maintain adequate customer support operators on
the 800 number"  (although "adequate" is not defined...)  The settlement
also requires AOL to expand their subscriber's options to allow mailed or
FAXed cancellation requests.  But AOL refused to reactivate on-line
cancellation.  "In many cases, 20% of the people decide not to cancel
after talking to us," Case commented in October.  The feature was disabled
in June--and last week, Raymond J. Oglethopre, Vice President of AOL's
Member Services told the Wall Street Journal that the change was made
because--cancellations were increasing! (1/20/97). 

The refunds cover complaints through January--but there's no signs that
the service will improve.  Currently AOL's 8 million members fight for
200,000 modems--a ratio of 40 subscribers for each modem.  This leaves
serious capacity questions.  "When deliberating which internet access
provider to subscribe to, you have to ask yourself a question," writes Rob
Bernstein in an upcoming issue of Internet Underground magazine.  " 'Do I
feel lucky?'  Well, do ya punk?"  Bernstein cautions that the odds of
being able to access service providers depend on their ratio of
subscribers to modems.  "Understand the differences," he writes, "because
nothing ruins the online experience like a crummy connection." 

The article reaches a clear conclusion.  "ISPs, both national and local,
tend to have better modem-to-user ratios."  And other internet
professionals agree.  "If you search the web for articles on 'How to Pick
an ISP,' you will find that knowledgeable folks say to look for a 12/1
ratio or better," notes Jeff Schult--a columnist for the New Haven
Advocate and special projects manager for North American Internet, an ISP
in Connecticut.  Earlier this month Schult saw the danger signs at AOL. 
"Their own figures to give them a user/modem ratio of 33/1...more than
TWICE what is generally considered to be borderline acceptable for an

As recently as Wednesday, AOL boasted that by June, the number of modems
will increase to 350,000--but this still leaves 22 subscribers for each
modem.  Steve Case says he'd announced yesterday's measures "In
combination with the $350 million investment program...announced two weeks
ago."  But this was, in fact, just a $100 million increase in the
already-planned six-month system upgrade. 

 Examining AOL's figures closely also shows that: 

* By June they hope to have just one service representative for every
  1700 customers.

* In the last year they added 3.5 million members--and just 150,000

This trend is demoralizing some employees.  "Over the past several months
I have seen the company sink farther and farther into its nasty corporate
trap as it shoots itself in the foot over and over," one technical support
staffer told the AOL List, "and continues to cheat people out of money and
time." They noted that "management wear blinders when it comes to AOL's
bandwidth problems."  And from their position, there's not much they can
do.  "I try to help members when they call, but often as not the problems
they experience are on AOL's end, not theirs." 

"AOL is everything that is bad about big companies," they concluded
candidly.  "They are horrid to their customers..." 

And disapproval is spreading throughout the industry.  "Customers have
every right to be angry with a company that has out-gunned their
competitors through massive marketing, when their competitors were instead
spending their money on purchasing modems," says Don Hurter--a partner in
a Bay Area internet service provider.  "This is a problem entirely of
their own making," he posted to a local newsgroup. 

Hurter has no bias against AOL.  "We used to refer prospective customers
who had no prior computer experience to first get an AOL account while
they learned how the Internet works," he told the AOL List Wednesday. 
"Many would wind up switching over to us when they wanted more direct
access. These days we don't do that, particularly because of AOL's bad
reputation for busy signals."

As he sees it, there's an implied obligation.  "If they had no obligation
to provide reasonable service, they could just install a single modem in
any given city, and claim they offer access," his Usenet post noted.
"Which is not too far from what AOL is actually doing."

The facts speak for themselves.  "America Online did not provide the
service that its much-publicized "unlimited" access promised," said Mark
Shiffrin, Connecticut's consumer protection commissioner.  Yet in the
settlement AOL negotiated, customers must pro-actively request the
refunds, or they don't get them.



CompuServe bought an ad during the Superbowl touting their reliable
access, unveiling their special toll-free number:  1-888-NOTBUSY. 

One viewer immediately dialed the number. 

And got a busy signal. 

        David Cassel
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