Shares of Netcom On-Line Communication Services Inc. were up today following last night's news that the ISP is phasing out its $19.95 flat-rate online access plan.
The company's stock rose $1.25 to $15.625 in early afternoon trading today.
Netcom, the first Internet service provider to implement the flat-rate pricing later adopted by many ISPs and commercial online services, is abandoning the plan to pursue the more lucrative market for corporate online access and services, officials said.
With about three-quarters of its revenue coming from value-added Internet offerings for business customers, the company will focus on expanding this segment and improving customer service, Netcom officials said in a statement.
The unlimited-access pricing model has also caused headaches for other Internet access companies.
Since America Online Inc., the largest commercial online service, announced a few weeks ago its own $19.95 flat-rate offering, users are staying online longer once they get on in the first place, and many local networks carrying the increased traffic are becoming overloaded.
Last month, CompuServe Inc. announced it would not adopt flat-rate pricing, saying the practice would lead to "gasoline wars."
"We do not believe that sub-$20 flat-rate pricing in the consumer space is profitable for anyone," said Steve Conway, CompuServe's vice president of corporate communications, at the time. "We are absolutely convinced that that is an unprofitable proposition for anyone, and we're not going to do that."