AOL Widely Expected to Go Free

Time Warner is widely expected to announce in a news conference next Wednesday that it will drop charges for its AOL online service, a plan first disclosed in the Wall Street Journal early this month. While AOL would still charge for dial-up access, it will be free for those with broadband.

The move is expected to be a topic of discussion at a Time Warner board meeting Thursday in New York City. AOL has lost 30 percent of its user base in the last four years, and executives are hoping that a free service would lure lost users back and provide a boost in advertising revenue.

AOL has already torn down its so-called "walled garden" for a number of its services, and repositioned its AOL.com portal as a leading Web destination with e-mail and video features. The company also recently rolled out a new Netscape.com site that is driven by user submissions like the popular Digg.com.

The merger between AOL and Time Warner is widely regarded as one of the biggest blunders in tech, and even AOL founder Steve Case has expressed regret over pushing for the two companies to join forces. "Yes, I'm sorry I did it," he said on the Charlie Rose Show on PBS last Friday.

Case did say he still thought the concept behind the merger would have worked. "I think it was a good idea," he argued. "I'm disappointed and frustrated that it hasn't developed in the way that that we all hoped at the time it could." Since the merger, AOL Time Warner has lost some $200 million in share value.

Analysts say what AOL has to say August 2 means a lot to Time Warner's future stock price, now near a two-year low. Investors are looking for reasons to believe the company is serious about turning the lagging Internet service around. However, some say that the media conglomerate has waited too long.

"They should have done what they contemplated two years ago to aggressively develop AOL as a Web service," Morris Mark of Mark Asset Management told Reuters on Thursday.