America Online To Unveil Flat Fee For Internet Access Essay, Research Paper

America Online To Unveil Flat Fee For Internet Access

The Internet is becoming more popular and more widely used, and the

Market for internet access is growing rapidly. To stay competitive in this

fast-moving industry, America Online has announced that they will switch their

price plan for internet access.to a flat-fee rate of $19.95 per month.

After the changed in price (decrease), the Supply curve

“S” will shift to “S1″. An increase in Supply curve will

increase (Quantity) people using America Online and decrease

Price.

America Online has announced a change to their price plan for internet

access. before they charged a rate of $19.95 for only 20 hours of internet

access. One of the many reasons is that it could help the service against

Internet competitors, by doing this “Keith Benjamin says there may be some

short-term negative impact on margins.” Negative impact on margins means that

there will be decrease in earnings. Another reason for this pricing move is

part of a broader effort to add new features to the service and make it more

compelling than rivals.

Since America Online’s price is lower people will tend to use America

Online more. This is a competitive market as America Online lowers their price,

other competitors will lower their price too. This will happen until they

reach the Equilibrium.

By staying in this fast-moving industry, America Online has unveiled a

set of features that include enhancements to listening to audio on-line, better

methods for viewing video on-line, and tools for media companies to spruce up

their on-line fare. In Addition to that America Online also expected to unveil

another initiative whereby Internet-service providers could offer their

subscribers easy access to America Online in return for ad revenue.