Microsoft cuts MSN dial-up price to woo AOL customers

Microsoft Corp. is offering an almost 20 percent discount on its MSN Dial-Up service's regular price, plus a free month of service, partly to nab America Online Inc. dial-up subscribers unhappy with a recent price hike, Microsoft announced Tuesday.

U.S. residents who sign up between now and June 30 will get their first month free, and for the next 12 months they'll be charged US$17.95 per month, instead of $21.95. The offer doesn't require subscribers to commit to a full year of service. After the first 13 months of service, the discounted rate will lapse and the subscriber will thereafter be charged the regular monthly fee. The offer doesn't apply to current MSN Dial-Up subscribers.

The move comes little over a month after rival AOL announced its decision to increase the price of its most popular unlimited dial-up access plan to $25.90 per month in order to nudge subscribers towards adopting its new High Speed broadband service.

Microsoft had been planning to launch a promotion before AOL made its announcement, because it believes that while broadband adoption is growing rapidly, there is still a significant dial-up market, said Kevin Mizuhara, marketing director at the MSN Access division.

But AOL's move certainly gave momentum to Microsoft's decision to launch this promotion. "We believe there are AOL dial-up subscribers who might be starting to look for a new [Internet service provider]," he said.

The divergent strategies reflect the two vendors' different positions in the Internet-access field. AOL is betting on growing its business via its new broadband service, while MSN currently only offers dial-up access. Microsoft also considers providers such as AOL's Netscape unit, NetZero Inc. and EarthLink Inc. its competitors in the dial-up space, he said.