New flat pricing plan gets AOL a $20m lawsuit

America Online members in three states have filed lawsuits against the service provider, claiming their ability to log on has seriously diminished since AOL instituted a new flat-rate pricing plan.

America Online members in three states have filed lawsuits against the service provider, claiming their ability to log on has seriously diminished since AOL instituted a new flat-rate pricing plan.

The lawsuits filed by subscribers in New York City, Chicago and Los Angeles seek class-action status on behalf of AOL's more than 6.6 million users who they claim are subject to frequent busy signals and other technical difficulties once online.

The most recent lawsuit, filed in California Superior Court in Los Angeles on Monday by five individuals, reportedly seeks at least US$20 million in compensatory damages, as well as punitive damages and attorney fees. The lawsuit also asks that AOL be prevented from offering the unlimited access service until it improves its network capacity.

AOL acknowledged a huge increase in network usage under the new unlimited access plan, but said it is working to boost capacity.

"We expect to prevail in the class action suits addressing member access to AOL," the service provider said in a statement. "Although we understand the frustration some members are experiencing at not being able to obtain immediate local access during peak periods, the average AOL member gets more value under unlimited pricing than ever before - spending approximately 32 minutes a day online, more than double the daily time in September."

AOL has begun a $250 million program to expand system capacity and customer support, including adding thousands of modems a month to improve connectivity, the company said.

AOL's switch to a flat-rate pricing plan for unlimited access on January 1 provoked controversy when it was announced late last year. An AOL subscriber in New York filed a class action lawsuit for alleged deceptive practices, claiming users were to be automatically switched to the new plan unless they called AOL and asked to stick with their current plan.

The unlimited access fee is US$19.95 per month, compared to the $9.95 per month fee for five hours of usage and $2.95 per additional hour.

An AOL spokeswoman said she did not know the status of that lawsuit, but said AOL worked with attorneys general in various states to resolve the matter and that customers were ultimately given the chance to choose which plan they wanted.

A CompuServe spokeswoman, meanwhile, said that the online service provider was not having any difficulty meeting demand for capacity.

AOL, based in Dulles, Virginia, is on the Web at http://www.aol.com/.

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