MSN Replies to AOL Price Rise

Local ISPs tend not to worry about promotions from the big companies because of all the hidden fees and the lengthy contract commitments, but MSN's latest offer has neither.

by Alex Goldman ISP-Planet Managing Editor [March 31, 2006]

For the next three months, MSN is offering a price reduction from $21.95 to $17.95 with the first month free. MSN's website says:

1 month free / $17.95 per month for 12 months / $21.95 per month thereafter*

Promotional Offer:

Offer expires June 30, 2006. Receive 1 month MSN Dial-up free trial. If you do not cancel your subscription within 1 month of account activation, the promotional price of $17.95/mo plus tax will be charged automatically to your credit card on a monthly basis starting from the end of the trial period. The $17.95/mo price is available for 12 months only, and then $21.95/mo plus tax or the then current subscription price for your MSN plan will apply thereafter.

A separate promotion that has been around for years offers the first three months free after which the $21.95 price kicks in immediately.

When AOL raised its prices last month, says Kevin Mizuhara, MSN saw an opportunity. "We're doing this for competitive reasons."

Several years ago, MSN ran some heated anti-AOL campaigns. The current effort does not seem to be supported by a TV ad blitz.

Switching is easy
Mizuhara says the company still uses Esaya's TrueSwitch product (see The Pitch to Switch). He adds that the company offers Microsoft Encarta and Photos Plus as well as Spy Sweeper from Webroot, an accelerator, and a firewall from McAfee. He does not comment when we note that it is ironic that Microsoft's ISP feels a need to augment Microsoft's firewall.

We ask Mizuhara why the company would provide service for free and why MSN is trying to gain dialup customers. Mizuhara says that the competition's promotions are actually off-putting.

"Often people are not seeing the fine print. The price goes up after the initial sign up on many broadband promotions. A lot of people are putting out promotions requiring a time commitment. Our program is not just free; there's no time commitment."

As to whether dialup is dead, Mizuhara has strong words on that as well. "When you think about what people are using broadband for, many don't need a bigger pipe. Although many people use e-mail on a daily basis, they're not interested in downloading music or watching streaming media."

Going back to the free promotion, Mizuhara says that customers are right to try out a service before buying it, and MSN is confident that people who try the service will stay. Note, however, that the company has never disclosed subscriber numbers, in contrast to others, such as EarthLink, who have been brutally honest about their churn rate.

"We want to allow the customer to try out the service before paying," he says. And the only fee beyond the headline rate is tax.

— End