Microsoft Lists On-Line Service Price But Only 500,000 Can Subscribe In Beginning

Microsoft’s new on-line service will be priced roughly on par with the industry’s Big Three - Prodigy, America Online and CompuServe - but only 500,000 people will be allowed to sign up right away.

The subscriber cap, announced Tuesday along with the price, will remain in place until customer satisfaction can be evaluated.

Microsoft Network, or MSN, is scheduled to debut with the company’s Aug. 24 release of its new operating system, Windows 95.

Microsoft Corp. is proceeding with plans to bundle MSN access software with every copy of Windows 95, and MSN will run only on computers that have Windows 95. Microsoft has said it will create a Macintosh version of MSN access software within a year.

The Justice Department said Tuesday it doesn’t plan to complete its antitrust investigation of Microsoft Corp.’s new on-line service and Windows 95 before the Aug. 24 release date.

The department is examining whether Microsoft’s decision to combine MSN access software with Windows 95 will give the company an unfair advantage over existing on-line services.

There’s been considerable speculation within the computer industry that the department would have to decide before the Aug. 24 launch of Windows 95 whether to sue Microsoft. Industry experts say it would be easier and less expensive for Microsoft to rewrite the software and separate the online service from Windows 95 prior to the program’s release.

However, Microsoft went into final production of Windows 95 last month, making such a rewrite less likely.

MSN’s standard plan will cost $4.95 per month, which includes three hours of use per month. Each additional hour is $2.50.

CompuServe, Prodigy and America Online - each with more than 2 million subscribers - offer basic monthly service at $9.95 for the first five hours, plus $2.95 for each extra hour.

New MSN subscribers will be given a free trial period, similar to those of the other services.

For the network’s first 500,000 customers, Microsoft will have a charter member annual plan at $39.95 per year, which includes three hours of use per month. Each additional hour will be $2.50. The plan represents a discount from the network’s standard annual plan.

The 500,000 member cap was set due to concerns about customer service, Microsoft said.

“We believe the 500,000-member milestone is a good place to measure how well we’re meeting our members’ needs, and to identify how we need to fine-tune our service,” said Russell Siegelman, general manager of Microsoft Network.

Microsoft said it chose the 500,000 member cap because it was concerned too many people could sign on before the network and billing structure are ready to handle a heavy load.

“Microsoft doesn’t want to alienate those first visitors to its service,” said Dwight Davis, editor of the Windows Watcher newsletter in Redmond. “It wants to make sure they’re getting an entertaining and enjoyable experience right off the bat, because there are a lot of alternatives out there.”

Some of Microsoft’s competitors, however, suggested different reasons for the limitation.

A spokeswoman for Prodigy said the subscriber cap sounded more like a marketing ploy to get a lot of subscribers quickly so the service will be lively.

“I think that they’ve kind of got to load them in early because they’ve got to create a community,” said spokeswoman Carol Wallace.

CompuServe spokesman Pierce Reid suggested the cap may be a smokescreen to avoid giving the Justice Department more ammunition - by growing too fast - in its antitrust investigation of Microsoft’s on-line service.

Competitors complain that since Windows is the dominant operating system for PCs, the bundling gives Microsoft an unfair advantage.

Industry analysts have estimated Microsoft could get 2.5 million to 9 million subscribers in its first year.