AOL to launch separate free service

AOL UK's boss gives the clearest indication yet that his company is about to offer free Net access... albeit as a different company

"It is feasible" that AOL will launch a new company offering free Internet access according to the company's UK MD, David Phillips. The move has been widely anticipated -- a report Monday suggests AOL is losing ground to the free model but remains reluctant to cut subscriptions from its core business.

In an interview Wednesday, Phillips spoke of a "multibrand" strategy that would include a spin-off company affiliated to AOL but not reliant on it.

"We're not about to fundamentally change our business model and we're not looking to divert resources from primary brands", said Phillips who previously hinted that AOL will make a major set of announcements around July.

Although details were not given, Phillips said the new service would be part of a two-stage attack on its rivals. First will be the free spin-off followed by a mechanism to bundle phone calls. Says Phillips: "We're spearheading a drive toward flat, stop-the-clock pricing. You pay once and then you go online as long as you like. That's truly a better option for the consumer."

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