CompuServe joins the crush with flat-fee Internet pricing

CompuServe Inc. is floating flat-rate, unlimited access pricing packages to some of its customers in what could be a test to determine whether the company can make money where many others complain they cannot.

CompuServe Inc. is floating flat-rate, unlimited access pricing packages to some of its customers in what could be a test to determine whether the company can make money where many others complain they cannot.

The Columbus, Ohio, online service chose customers at random among its three million registered users earlier this month and offered, via letter, flat-rate fee packages, ranging from $24.95 per month to $27.95, according to CompuServe customer service personnel. The company ordinarily charges $9.95 for 5 hours of access plus $2.95 for each additional hour.

CompuServe's special offer, good for 90 days among the takers, seems an experiment in customer enthusiasm for flat-rate access, said Jim Balderston, analyst with Zona Research Inc. in Redwood City, Calif.

The flat-rate for Internet access has proliferated since AT&T Corp. entered the market offering unlimited Internet access for $19.95 early last year. AT&T's move was subsequently matched by other Internet access providers and online service providers, such as America Online Inc. What many of those companies discovered is that the $19.95 unlimited access price package is a "loss leader" in the market, a term which refers to selling an in-demand product at a loss to entice people onto the service, said Patrick Keane, analyst at Jupiter Communications Inc.

CompuServe had offered a flat-rate package for 10 months last year, but dropped it. However, analysts have been predicting that as more consumers buck metered access, the hourly rate may disappear.

The second largest online service after AOL, CompuServe may have discovered it is losing subscribers to providers that charge flat rates, either for just Internet access or for access to a proprietary network, said Balderston.