EarthLink Inc. said Tuesday it is raising the monthly price of its basic, unlimited dial-up service $2 to $21.95, a month after rival America Online Inc. increased its rates.
The price increase, the first in EarthLink's history, came earlier than expected and bodes well for the company's financial performance, Goldman Sachs analyst Anthony Noto said in a research note.
EarthLink rose $1.56, or 13%, to $13.83 on Nasdaq. Its shares have climbed about 130% year to date, outperforming most Internet stocks, but are still down more than 9% from year-earlier levels.
EarthLink said its new rate goes into effect on July 2 for new subscribers and on Aug. 1 for most of the Atlanta-based company's 3.1 million existing customers.
EarthLink Chief Executive Gerry Betty said the price hike puts the service at the same price level as rivals such as Microsoft Corp.'s MSN and AT&T Corp.'s WorldNet. He said EarthLink still sells its service for less than industry leader AOL.
AT&T WorldNet offers unlimited access for $19.95.
AOL raised its monthly fee to $23.90 from $21.95 in May. At the time of the AOL increase, EarthLink said it might raise rates. MSN responded by launching an aggressive $50-million advertising and promotion campaign and offering subscribers the option of locking in a rate of $21.95 until Jan. 1, 2003.