AOL Australia set to spark a price war

AOL Australia's launch today is expected to cause some shakeup in the local Internet industry, but customer loyalty to the global service provider is in doubt. A consultant says that although many customers will be keen to try AOL Australia's offerings, actually maintaining a strong customer base may be difficult for the organisation. OzEmail and Big Pond have already announced price drops and aggressive packages to combat the newcomer.

AOL Australia's launch today is expected to cause some shakeup in the local Internet industry, but customer loyalty to the global service provider is in doubt.

According to Paul Budde, independent telecommunications consultant, although many customers will be keen to try AOL Australia's offerings, actually maintaining a strong customer base may be difficult for the organisation.

"(AOL's) success (in America) is based on its historical role and loyalties from times there was no Internet," Budde says. "I find it very interesting to see if it will be able to compete in a market that hardly knows the company and where there is an established market."

Aiming to become a leading Internet service provider in the Australian market, AOL Australia's network will initially reach 70% of the population, but will be expanded "in response to consumer demand," says John Cookson, CEO, AOL Australia online service.

Targeted at the consumer market, AOL Australia will offer Internet services including e-mail, chat rooms, message boards and local content and information on topics including sport, weather and news.

AOL Australia will come up against local Internet service providers OzEmail and Big Pond which have already announced price drops and aggressive packages to combat the newcomer.

Budde says changes in the Internet world since AOL's emergence 10 years ago in the US will see the success of AOL Australia determined by a price war rather than by online and content services.

"It's a totally new market -- an Internet market rather than the online market that was successful in America," Budde said.

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