With broadband price cuts from telephone operators and ISPs in the US, packaging a DSL service with access to AOL services was rapidly becoming uneconomic for the content giant.
America Online found that it couldn’t offer a price-competitive service: being so far down the value chain meant that the subscription cost of AOL broadband product was often far higher than that of competitors, once subleasing prices had been piled on top.
As the numbers of dial-up subscribers dwindle, AOL is moving towards providing content to users who supply their own access, thus concentrating on their core competencies and not wasting resources trying to be a telco. The market seems to be segregating out a bit: last year, Microsoft also dropped DSL access plans. How long will it be before companies which are more geared to providing access to the internet, such as BT, drop their content offerings?