AOL Launches Enhanced Broadband Service

America Online has launched new services for broadband subscribers, including exclusive multi-media content, bundled software such as firewall security and increasingly integrated messaging applications.

The new campaign is part of the embattled ISP’s plan to attract subscribers to its AOL for Broadband services at a time when U.S. households are increasingly signing up for high-speed Internet access. AOL is searching for a way to coax its mostly dial-up base of 35 million subscribers to switch over, while continuing to serve its core base as well.

With the latest introduction of AOL 8.0 “Plus” for broadband subscribers, the online unit of AOL Time Warner is also signaling a further shift toward becoming a provider of exclusive content, including original programming, and services such as enhanced parental controls and firewall protection for an always-on connection,

The latest push adds to the television advertising campaign it launched last week with “Welcome to the World Wide Wow” spots, along with new premium services such as Web-based voice mail.

Now, the marketing effort is being expanded to include the company’s “bring your own access” service, which provides AOL’s content and services to subscribers who already have a high-speed Internet connection. Until now, BYOA has largely been a word-of-mouth effort. The new push includes more television and radio ads, a 50-city mobile marketing tour, and a new round of AOL’s tried-and-true method of sending out CDs in direct mail and positioning them in retail establishments.

The mobile marketing tour will include an 18-wheel retrofitted tractor trailer, which will be making stops to 50 markets throughout the summer, including special stops at NASCAR races and other destinations. It kicks off in May.

Just as AOL Time Warner executives promised back in December, content from some Time Warner publishing properties, such as Entertainment Weekly and People, is no longer free on its Web properties and is instead being packaged for AOL subscribers as exclusive content. Content from more Time publishing properties is expected to follow the exclusive route to AOL subscribers, company officials said.

Subscribers will also be offered access to ABCNews.com, including news clips and chats with ABC News personalities. The ABCNews.com content is otherwise offered to subscribers through a partnership with RealNetworks and costs $4.95 a month.

Original programming includes exclusive interviews with music and entertainment celebrities, previews of upcoming movies and behind-the-scenes looks at popular television programs.

The service is also featuring AOL’s latest AOL Communicator application, which integrates its popular Instant Messaging client with its email client so that, for example, users can launch emails to groups from their buddy list.

The 8.0 “plus” features include new parental controls, a popular feature among its base, improved for broadband subscribers. It also offers users a bundled firewall protection service, with McAfee’s Personal Firewall Express software, which helps users block and track intrusion attempts to their always-on connections. Other software services include spam fighting tools, pop-up ad-blockers, and diagnostics that check the computer’s performance.

AOL executives say subscribers to the beefed-up services would otherwise pay $50 a month for the content and software that is bundled into the AOL for Broadband upgrade, which also includes sports feeds from partners such as MLB.com, the NBA, CNN, and Fox Sports.

“The main focus here is the marketing push, and a further shift from being an Internet access provider to increasingly partnering with access providers” like cable and telephone companies to provide broadband access, said Jed Kolko, an analyst with Forrester Research who covers broadband and Internet access markets.

“This is certainly their best chance in the broadband space,” he said of the new campaign’s focus on added content and bundled software.

Increasingly, Kolko noted, cable and telecommunications companies are now largely thought of as Internet access providers; the wider trend among all access providers is to provide content and services along with access. “That is primarily true for just about every ISP,” with the notable exception being Earthlink, he added.

The shift is tricky in some ways, added Joe Laszlo, senior analyst for Jupiter Research. (Jupiter’s parent company also owns this publication.)

AOL has to be careful to continue servicing its dial-up base, while coaxing them to upgrade to broadband, he said. “They need to create a different experience for the broadband users, but can’t change it too much for the by and large happy narrowband users.”

Laszlo also gave the company high marks for its redesigned Welcome screen for the broadband service. The screen changes throughout the day to reflect programming for different day parts, and has integrated programming features along with Google search and launch buttons for multi-media such as video, email and pictures.

“My favorite thing about this is the Welcome Screen. Consumers consistently say that local content is important. AOL is putting that at the top where it should be,” he said.

“The exclusive content is very much geared to specific segments, such as moms and teens with the entertainment content. But the ABCNews.com service, which is a paid service on the public Internet, is another way to convey real value, especially as more (online) companies shift to paid content models. They have to both unlock the utility value of broadband and the sexy, fun stuff such as with videos. They deserve strong praise for that.”

Since AOL’s CEO Jon Miller took the reins of the company in August of last year, he has been steadily adding to the company’s programming and marketing ranks. Today’s announcements reflect the work they have undertaken since those key appointments, which include marketing veteran Lisa Hook as president of the broadband division.

She is working closely with executives such as Joe Redling, AOL’s chief marketing officer, and Len Short, executive vice president for brand marketing on the campaign, in the campaign to promote the service as more edgy.

AOL said about 2.7 million U.S. subscribers currently use its broadband service, either through BYOA access or through bundled plans offered in partnership with cable and DSL providers, despite little marketing to date for broadband and none for the BYOA.

The new marketing effort includes a 45-day free trial and pricing plans that let existing AOL dial-up members upgrade to a $9.95 BYOA broadband subscription, with five hours of dial-up connectivity until December 31, 2003. After that it goes back to the standard price of $14.95.

It is also pitching unlimited dial-up usage with one month at $9.95 before rolling to the standard price of $24.95. The bundled broadband service with cable and DSL providers costs $54.95 a month and includes unlimited dial-up service, multiple simultaneous logins, and a broadband modem.

“This package of initiatives is the beginning of an effort that will continue to grow over the coming year and beyond,” Miller said in a statement. “Make no mistake about it — AOL is in the broadband game and we’re in it to win it.”

Redling said as AOL’s audience has grown more diverse and the Internet become less of a novelty to them, the company needs to communicate differently than it has before. “This means advertising as much to current members in the market for broadband as it does targeting those who use other services or aren’t yet online. This is a fundamental departure for us.”

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