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America Online beset by outages amid wave of new subscribers

January 17, 1997

NEW YORK (AP) _ America Online had more technical problems Thursday, one day after its second major outage since the summer forced it to shut off service to half its members.

The nation’s largest online service has been struggling to accommodate a flood of users who are taking advantage of a new pricing policy that allows unlimited access.

Despite the problems, AOL stock shot up 9 percent Thursday as the company announced new investments to expand capacity and gains in subscribers.

Company spokeswoman Trisha Primrose said the outage late Wednesday was not related to heavy usage. She said technicians first discovered a problem at about 2:15 p.m. EST, but weren’t sure what was causing it.

``We made the decision at 3:45 p.m. to bring down the system down to 50 percent capacity in order to fix the problem,″ Primrose said. That cut off service to about 100,000 users.

The problem was soon identified as a malfunctioning router, which is a device that directs data through the AOL network. Full service was restored at 8 p.m., by which time the system was back up to 210,000 users.

On Thursday, the online service’s chat rooms were down for about an hour after a hardware problem.

In August, AOL’s entire system was down for almost 19 hours due to errors by technicians during a planned shutdown for maintenance.

The latest woes, however, come as subscribers are growing frustrated with other technical problems including busy signals and long delays. In December, AOL began a new pricing plan that enables users to pay a flat fee of $19.95 for unlimited access.

As a result, usage skyrocketed. AOL said its subscribers spent a total of 102 million hours online in December, up from 45 million in September. The company also said it recently topped 8 million subscribers, adding 1.2 million in the fourth quarter of 1996 alone.

Earlier this week, AOL was sued by a group of California subscribers who said the pricing plan made it too difficult to dial in. The lawsuit seeks more than $20 million in damages.

Steve Case, the company’s chairman and chief executive, apologized to subscribers in a letter Thursday and said AOL is taking aggressive steps to address the problems. He gave no sign, however, of any plans to suspend the flat fee.

He said the company will increase spending on increasing capacity to $350 million, most of which will be spent on adding modems and building a new data center.

AOL also will scale back marketing efforts to attract new members until it can handle a larger volume of calls.

In trading Thursday on the New York Stock Exchange, AOL was up $3.37 1/2 at $41.37 1/2 a share.

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