America Online has been suffering from its success for the past several months in France. It’s inability to keep pace with the demand for its flat-rate service has resulted in busy signals, dropped connections and three lawsuits and has given the company a public relations black eye.
AOL France launched its flat-rate service in August 2000. It realized shortly thereafter that it did not have the bandwidth to keep up with the number of new subscribers who jumped at the chance for unmetered Web browsing. To try to meet the problem, AOL decided in October to institute a “timer” system, which cuts off the connection after a half-hour of non-use, and to place time limits on its heaviest users while it invested to expand its capacity.
In December, three separate courts ordered AOL to comply with its “unlimited,” flat-rate subscriber contracts and stop putting timers or limiting those subscribers’ access time. However, those orders applied only to the three people who lodged complaints.
As flat-rate Internet access has become more popular in Europe, service providers in several countries have been unable to keep up with demand. In the U.K., for example, Freecall recently kicked off subscribers it deemed were “abusing” its by staying online for up to 23 hours per day. Indeed, several services in France, Germany and the U.K. have advertised 24-hour, 7-day-per-week access and then failed to keep their promises. In part, the problems are due to the local telephone giants, which though they will soon lose their local-loop monopolies, still maintain near total control. Although many Internet service providers have offered flat rates to end users, they themselves have had to pay metered rates to the phone companies.
Only now are companies like British Telecom and Deutsche Telekom beginning to offer wholesale flat rates to Internet service providers.
AOL’s short-term problem was slightly different. It did not anticipate the popularity of its 99 franc-per-month offer and found itself short of modem lines. The busy signals and cutoffs stemming from that generated a good deal of negative publicity in France and cast a cloud on AOL’s reputation as a consumer-friendly service provider.
In some ways, AOL should have known better. It launched a flat-rate service in the U.S. in 1996 that also proved to be too popular for the company’s network to handle, causing many subscribers to reach only busy signals and generating a mountain of negative press. On the other hand, the problems certainly did not slow AOL’s massive customer growth in the U.S., which may bode well for it in France as well.
The users in France who filed suits argued that “unlimited” means just that and that any form of timing system is a breach of contract. Those suits, filed by three individuals in different areas of France, use relatively obscure French code, in which the court does not hear arguments from either side, but instead notes the alleged infraction and gives the company one month to implement fully its contractual obligations. If the company fails to do so, then an open court session is called and a regular breach of contract trial is begun.
AOL has declined to comment on whether it had removed the timers for the three users or whether it was considering scrapping the limitations entirely. “Like all individual complaints, we are reviewing these on a case by case basis,” said Benedicte le Brun, a spokeswoman for AOL Compuserve France.
If AOL does not reach a settlement with the plaintiffs, trials will begin in mid-January. But Jean-Claude Patin, who runs the legal consulting company Juritel, said he did not expect the three individual suits to broaden into a class action. “It is not at all clear that there will be a high enough number of people who want to file suit,” to make it into a class-action suit, he said.
AOL Compuserve France is 45 percent owned by AOL Inc. and 55 percent held by Vivendi SA of France. Jean-Marie Messier, chairman of Vivendi, has said that he hopes to sell that stake by the end of the year.