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February 7, 1996

Compuserve Joins Push to Broaden Internet Access


Compuserve, reaching for a more computer-savvy audience and a global Internet presence, said Tuesday that it has begun offering an Internet-only service to customers worldwide.

The service, called Sprynet, is meant to build up a new market for Compuserve, whose consumer on-line service is used chiefly by business people. Sprynet includes free software and unlimited Internet access from local phone numbers for a flat fee of $19.95 a month.

But Compuserve Inc., a unit of H&R Block Inc., said it would initially bar its Sprynet customers from more than 200 public forums on which sex-related issues are discussed on line. In doing so, Compuserve becomes the first big Internet service provider to restrict information.

Meanwhile, James V. Kimsey, chairman of America Online Inc., said Tuesday that its Internet-only business, GNN, attracted more than 100,000 customers the last 90 days, making it the fastest-growing Internet-access business in the country.

Even so, those numbers are dwarfed by America Online's consumer service, which for the first time has more than 5 million subscribers.

Compuserve's entry into the Internet-only market was seen by analysts as part of a scramble by the consumer services to exploit the popularity of the global computer network.

"We're seeing the last bastions of the proprietary systems falling down," said Greg Wester, an Internet analyst with the Yankee Group, a consulting firm in Boston.

The consumer services are entering a highly contested market that is expected to be even more competitive with the arrival of telephone and cable television giants in the months to come.

AT&T Worldnet Services said Tuesday that it will begin offering nationwide Internet access to AT&T's 90 million telephone customers sometime in the next eight weeks.

This week, Prodigy Services Co., a joint venture of IBM and Sears, Roebuck & Co., announced a market trial in the New York City area that would offer Internet-only access for $1 an hour, with no minimum or maximum monthly connection time. The trial begins March 19 and will be extended nationwide if successful, said Mike Darcy, a spokesman for Prodigy.

Also this week, the Microsoft Network, the on-line service of Microsoft Corp., said it was accelerating plans to become a global Internet access provider.

For Compuserve, based in Columbus, Ohio, the Sprynet service is the second phase in a three-part plan to exploit the Internet. Last year, Compuserve added Internet access to its information service, which has 3.5 million users. Next month, Compuserve will roll out its family-oriented Wow service, which is expected to appeal to novice computer users.

Robert J. Massey, president and chief executive of the Compuserve, said the decision to block the sex-related news groups was made to avoid any potential legal problems in Germany, where prosecutors have asked Compuserve's information service to block access to information about sex and neo-Nazis.

Massey said Compuserve was unable to block access to such material in Germany alone, so it had to eliminate access globally. The company said it was trying to restore full access where permitted within the a few weeks.

Meanwhile, AT&T Worldnet, which has been conducting trials of its Internet access service, announced a plan Tuesday that was intended to bolster the confidence of consumers in electronic commerce.

AT&T Worldnet said it would assume any costs its customers might incur because of credit card fraud from the purchase of merchandise or services on the Internet. The offer applies only to Worldnet customers who sign up for service using the AT&T Universal Card, said Tom Evslin, an AT&T vice president.

Under law, consumers are generally responsible for only the first $50 of unauthorized charges on their credit cards. In practice, however, banks often choose not to impose the $50 liability. Since credit card fraud is rare on the Internet, the appeal of the program is primarily considered psychological.

At the close of markets Tuesday, America Online reported quarterly earnings of 10 cents a share, in line with analysts' expectations. The company, based in Vienna, Va., said net income was $10.6 million for the period on revenue of $249 million. For the corresponding 1995 period, the company reported a loss of $38.7 million on revenue of $76 million.

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