MICHELLE HAN, CNN ANCHOR: The number one Internet service provider in the United States, America Online, is preparing to raise the price of Web access for the first time in three years. Some analysts say the move will help parent company AOL-Time Warner, also the parent of this network, meet aggressive growth targets for 2001. CNN's Bruce Francis has more.</s>BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): There are few things Wall Street loves more than a company that raises prices and makes them stick. AOL's increase isn't a surprise to Wall Street. The timing is.</s>FREDERICK MORAN, JEFFERIES & COMPANY: We had expected that it would get announced later this summer and probably not hit until the fourth quarter. So they are unrolling the price increase fully one quarter earlier than expectation.</s>FRANCIS: America Online, which, like CNN, is owned by AOL Time Warner, says that the company has invested $3.5 billion in the service over the past three years, and added many new features. The increase works out to be 8.8 percent. Inflation has increased 8.9 percent since the last hike. AOL users chatting online with MONEYLINE weren't thrilled. Some offered succinct economic comparisons. And advice. And some sounded just plain mad. If AOL's past price increases have hurt membership growth, it's hard to tell. AOL switched to flat pricing in December of 1996. The service had seven million members then. When it increased rates again in April of 1998, membership had grown to 12 million. Today, with rates poised to rise again in July, AOL has 28 million members. Analyst Jordan Rohan expects that as many as 600,000 could drop the service. But that would eventually be offset by new members.</s>JORDAN ROHAN, WIT SOUNDVIEW: When you really look at this, if we scrub the numbers for next year, we're expecting somewhere in the order of 4 or $500 million in cash flow impact for next year.</s>FRANCIS (on camera): Microsoft says that it has no plans to raise rates for MSN, but it may emphasize price in future marketing campaigns. Earthlink wouldn't reveal its pricing plans. Bruce Francis, CNN Financial News, New York.
AOL Planning to Raise Prices of Internet Access