NEW YORK — AT&T Corp., the largest U.S. long-distance phone company, is starting a low-cost Internet service for $4.95 a month to compete with free online-access companies such as NetZero Inc.
AT&T said it can afford to charge about $15 less a month than it does for its standard WorldNet Internet plan because the new service will be subsidized by advertising.
Companies such as NetZero, based in Westlake Village, Calif., also require that customers view ads on their computers in exchange for access.
Free Web services have gained millions of customers in the U.S. during the last year as consumers opt to view advertising rather than spend as much as $22 a month for online services such as America Online Inc. AT&T is hoping to woo those consumers who don't want to pay much, yet want a service that's reliable and customer-friendly.
AT&T said its WorldNet service won top ratings from Visual Network's survey of Internet service providers in June and has won several citations from publications such as "PC Magazine." People who sign up for the $4.95 plan will get 150 hours of online access a month, six electronic-mail names, computer space to start a personal Web page, instant messaging and other e-mail services.
AT&T's WorldNet service has about 1.5 million subscribers, according to a spokesman. America Online, the world's largest online service, has more than 23 million subscribers.