The AOL List: Secrets

David Cassel (
Tue, 11 Feb 1997 01:52:21 -0800 (PST)

			   S e c r e t s


Saying it was "more efficient and more cost-effective to our shareholders
to build our own network," AOL's senior vice president told the New York
Times that AOL deliberately left many phone numbers off their access list. 

That directly contradicts AOL's careful public statements:  the same day
found AOL's international president telling Bloomberg's news service that
AOL was working "night and day" to try to increase system capacity.  One
Usenet poster re-visited Steve Case's January 16 Community update about
busy signals:  "I want to assure you that we are doing everything we can,
as quickly as we can, to address your concerns." 

The access numbers--provided by Sprint--cost AOL more money to operate,
somewhere between $1.00 an $1.50 an hour.  These figures raise the
prospect that with unlimited pricing plans, customers spending more than
three hours a week would cost AOL money-- and that AOL chose to conceal
those numbers from subscribers. 

One Usenet poster found an explanation.  In December, Art Stone, a
Michigan programmer and consultant specializing in data communications
software, realized that all SprintNet modems in his city were busy.  He
blamed AOL subscribers using the old modems in SprintNet to bypass the
service's busy signals.  "AOL is gonna have one hell of a SprintNet bill,"
he noted.  Two months later, Stone posted his analysis of the company's
second quarter figures.  Cost of revenues had increased to $245 million
for the three months ended December 31--a leap to 60% from 54% ("mostly
network costs...probably Sprintnet charges, but it isn't clearly
identified").  Previously AOL had paid $278 million to Sprint for the
entirety of fiscal 1996--and committed to paying minimums of just $192,
$142, and $131 million for network costs over the next three years. 

AOL had apparently been concealing the existence of SprintNet lines
because it's cheaper for them.  "AOL cannot offer $19.95/month flat rate
service, spend half the revenue on advertising and customer support, pay a
third party (Sprint) $1/hour and have any possibility of making money,"
Stone told the AOL List.  "AOL has to force users away from SprintNet."

But AOL's actions belie Steve Case's January Community Update, where he
claimed "we will do whatever it takes to improve the quality and
reliability of AOL."  Instead, according to the New York Times, working
numbers went unpublicized for congested areas -- in Atlanta, Boston,
Chicago, Denver, Detroit, Houston, Los Angeles, Miami, New York,
Philadelphia, San Francisco, Seattle and Washington. 

The paper concludes that customers can find SprintNet numbers by calling
1-800 473-7983. In fact, distributing information about AOL appears to
have spawned a cottage industry. One mass-mailed e-mail from "Gateway to
AOL" promised "NO MORE AOL BUSY SIGNALS"--advertising a 1-900 phone number
charging $2.00 a minute.  Its solution? Connect to AOL via a TCP/IP
connection.  The recorded message claimed AOL was concealing this option
because subscribers would simply retain their internet access and drop

AOL has committed other sins of omission.  Steve Case's announcement of a
settlement with 36 state attorneys general buried the word "refund" in the
fourth paragraph--without a phone number or address.  "I can't find it!"
one poster noted on Usenet.  "Like AOL is going to tell me!"  Case's
statement disclaimed any culpability.  "Naturally, we anticipated more
usage, and prepared for it," it began (adding implausibly that "we
seriously underestimated the surge in demand that actually occurred.") 

Refund information is available at
But AOL didn't execute the agreement's terms, either.  Though the
attorneys general stipulated that AOL "shall maintain adequate customer
support operators on the 800 number" customer service staffers have
adopted a "wait reduction" strategy--which consists of disconnecting
callers if their wait would be longer than 45 seconds.  "Not a bad idea," 
one staffer told the AOL List, "until you realize that the call ceiling
they put in place allows no more than approximately 40 calls in the queue
(this down from four or five hundred!) By my math, that means that 9 out
of 10 callers to tech support (and soon, billing as well) are told that we
cannot take their call right now." 

An internal memo says the policy will "remove these unneeded pressures" 
and "balance the peaks and valleys" in call volume.  But AOL's voice-menu
prioritizes the calls.  Last week a call to claim the refund took over
half an hour to reach a live operator;  a call to open a new account was
answered instantly. 

"Credits are expensive to the company," reads the phone script distributed
to customer service representatives, "so we always attempt to Save without
credit, or with minimal credit..."  The script then provides a long list
of questions to ask customers before accepting their cancellation.  "I
just cut to the chase and cancel the account," our rogue staffer
commented, "but only after informing the member of just how easy setting
up for an ISP is." 


As the quarter started, Steve Case outlined his plans in a conference call
attended by the AOL List.  "It's not our god-given right to wave our hands
and get 10 million members," he told reporters.  "We'll get there by doing
a better job than anybody else."

        David Cassel
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