New Pricing Policies Spur Internet Use On-Line Companies Scramble To Meet Increased Demand

In the last three years, the Internet has gone from pricy gourmet portions to all-you-can-eat gluttony. Accounts once measured by the expensive hour are now pull-up-to-the-trough cheap - and users love it.

The trend began in 1994, when small Internet service providers started offering a flat monthly rate for on-line access. Then the Microsoft Network announced in November it would let users stay on line all day for only $19.95.

The nation’s largest Internet service, America Online, finally switched December 1, allowing its 7 million customers to spend as long as they wanted logged in.

“We’ve gone from at least one $300 dollar month to only $19.95 on AOL. I do research on the Web and this is doing tremendous things for my ability to work,” said “Lizabeth,” an AOL account holder in Illinois.

Flat rates also make the Internet more democratic, she believes.

“It means more people of lesser means can have access. If they really want the on-line world to be more inclusive and diverse, it’s got to go flat rate,” the 42-year long-time computer user said by phone.

And indeed, usage is up on the big commercial service, even though the new prices have only been in place for a month.

“People are staying on line on the average about 20 percent longer. The total number of hours customers are on is 3 million daily. In October it was 1.6 million,” AOL spokesman Steve Sigmund said.

To accommodate all that extra connect time, companies are scrambling to beef up their services. A year ago AOL could only handle 84,000 users at once. Now that figure is 230,000.

“We’re spending about $250 million between now and the end of the year to upgrade the system. We’re adding tens of thousands of new modems,” said Sigmund.

Neither AOL nor Microsoft, which has 1.7 million users, will say how many new users have signed on, or how many old ones are complaining about difficulties logging on before all the new modems are installed.

While unlimited time on line is a dream come true for Net-heads, it’s a nightmare for phone companies. Since most Internet services give their users local access numbers to call into, the flat rates tie up phone lines with millions more hours of non-revenue-producing calls.

The average voice call lasts three to four minutes. The average Internet call last an hour. And about one percent last an entire day, said Jim Diestel, director of advanced services for Pacific Bell in San Francisco.

“At one point in time the way we found trouble in the network was anyone who used the phone for a 24-hour period. We assumed their phone was out of order and we actually dispatched a truck to fix it. Now it’s probably just an Internet call,” he said.

Those all-day, all-night users aren’t just a problem for the phone company. While most account holders only stay on while they’re actually using the network, some try to keep their connection open all the time to avoid the inconvenience of logging back in.

Programs with names like Keep Alive and Stay Connected can trick a network into thinking a subscriber is using their connection, rather than merely leaving it open but idle on their computer desktop.