CompuServe Corp is biting the bullet and introducing a flat rate pricing plan at $25 per month, $5 higher than America Online Inc, but in line with Internet Service Providers that have gone to flat rate, such as Netcom Online Communications Inc. This comes as the company reports its first quarter figures showing interactive service revenues continuing to decline as network service revenues increase. The Columbus, Ohio company, which is 80% owned by H&R Block Inc, reported first quarter net losses of $4.1m, down from losses of $29.6m last time, which included a $17.7 exceptional charge, on revenues down just over 1% to $205.7m. The loss of $0.04 per share was slightly better than Wall Street expected. First Call’s average was $0.07 per share. H&R Block still has the company up for sale, though rumors of AOL’s interest have waned recently and it’s difficult to see who else would buy it. The new plan will be introduced in the US and Canada only on October 1 and the company reckons its tests proved consumers are willing to pay more than $20 for its value-added service. But perhaps more importantly, it claimed it is not possible for an online service such as itself to make a profit at $20 per month. CompuServe has always been aimed more at the ‘serious’ users who wants news and other information, rather than pure entertainment, which is AOL’s bag. The company says this does not signal any push to move away from its consumer base. The company will continue to offer its pricing plan for $10 for five hours, then $3 for each hour after that. There are no plans at the moment to introduce something similar in Europe and Asia. The price increase comes despite a clear indication that the company’s flagship CompuServe Interactive (CSi) service is faltering, while its SpryNet internet-only service is gaining ground. CSi subscribers fell most heavily in the US, but also declined in Europe, the worldwide total is currently 2,637,000, compared to 2,767,000 at the end of the previous quarter. The total subscriber base including the company’s OEM deals fell 32,000 to 5,341,000. The company’s Network Services division, which connects companies to the internet and sets up intranets and extranets, added 57 customers in the quarter to take the total to 1,257. Revenues of $75.4m is 27% higher than last year and 37% of the total now. CompuServe tested the pricing between $25 and $28 apparently (CI No 3,214). The company’s real value is its network, which was expanded this week by the inking of four peering agreements in Europe and Asia. The deals were signed with Ebone, DE-CIX and MAE-Paris in Europe and Internet Initiative Japan, the parent of Abone in Asia. Cash increased to $168m in the quarter from $161m last quarter, the first increase since the initial public offering in April last year.
