Aol’s Planned Pricing Switch Has Some Up In Arms

America Online Inc. said regulators from a dozen states are scrutinizing the company’s plan to revamp the pricing for its online information services.

One of the nation’s largest providers of such services, America Online announced in late October that it would offer subscribers unlimited usage for $19.95 a month. America Online proposed the change to retain subscribers amidst fierce competition from rivals such as AT&T Corp., Microsoft Corp., and the Internet global computer network.

What has regulators concerned is the way in which the Dulles, Va., company plans to carry out the pricing change, according to a Form 10-Q America Online filed with the Securities and Exchange Commission on Thursday. America Online is automatically switching subscribers to the flat rate unless customers notify the company by Dec. 1 that they want to stay with the hourly fees.

Frequent online users will save money under the flat rate. However, America Online subscribers who now opt to pay $9.95 a month for up to five hours of usage could see their rates double - automatically.

“Shouldn’t you tell someone you are going to double their bill, rather than just doing it,” said Jonathan Jacobson, a New York attorney who subscribes to America Online. “That I think is the issue of consumer unfairness.”

America Online says it is going all out to let its seven million subscribers know about their pricing options. Among other steps, America Online is notifying subscribers about the new rate when they sign on and off of the service.

“We are bending over backward and will continue to bend over backward to make sure all of our members are completely aware of the plan and understand their billing options,” said Pam McGraw, an America Online spokeswoman.

Nevertheless, customers who don’t contact America Online prior to Dec. 1 will be automatically switched to the flat rate. After that, subscribers will have 90 days to request that they be moved back to the hourly plan. After that, the hourly rate will no longer be available.

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