by Kathleen Day
Wednesday, February 2, 1994
Customers are having to wait in line to use America Online.
A victim of its own popularity, Vienna-based America Online Inc. said yesterday that during peak hours -- 9 p.m. to midnight East Coast time -- it will limit the number of personal computer users who can log on to its interactive system, which provides electronic mail, news, weather, shopping and other information services.
An unexpectedly large surge in new subscribers has sent America Online's stock soaring but also has taxed the company's capacity. It has left customers fighting busy signals on phone lines during periods of high use, slowed down execution of computer commands for those who do get through and forced the company to suspend service for five hours late Saturday afternoon while it installed new software designed to handle more customers.
America Online President Stephen M. Case informed subscribers -- or at least those who got through -- with an electronic memo last night that the company promises to reduce the log jam within a few weeks.
He said during a telephone interview yesterday that the company plans to fix the problem completely within 90 days.
"In the meantime, in an effort to provide the people who do get on with a better quality service, we decided it would be better to let fewer people connect ... at peak times," the memo said. "What that means is that after you connect to your local access number you will sometimes be turned away by our host computer in Virginia. ... If you keep trying, you'll eventually get in -- but we realize this is a major inconvenience and we are very sorry about it." The company would not disclose how many customers might be affected.
America Online is the nation's fastest-growing on-line service. The company now has 600,000 subscribers, double the 300,000 it had last June. It took eight years to build up to 300,000.
Some analysts have warned that America Online could lose customers who find it hard to get through. Competition is intensifying from several companies, including CompuServe Inc., which recently announced price cuts in on-line service, and from Apple Computer Inc., which recently announced it will venture into the on-line business.
"The key to us is how we handle this," said Case. "Customers respond well as long as you are straightforward with them."
He said the company, which has been experiencing overcrowding for several months during peak hours, has been monitoring cancellations and "we haven't seen any uptick" because of the capacity shortage.
In fact, Case said, the overall retention rate steadily improved in 1993, including in recent months, when customers began to have to dial several times before getting through.
"But we don't want to diminish the problem," said Case, noting that word of mouth is still a key selling mechanism and even one unhappy customer "is too many."
Copyright 2009 The Washington Post Company