AOL UK announced yesterday it is to close its pay-as-you-go internet service provider Netscape Online due to a continual fall in users.

The ISP, which bought Netscape in 1998, launched its own unmetered access service last November and claims it has been a major success.

"We have done a review of the business as a whole and the one thing that stands out is the success of flat-rate packages," said AOL chief communications officer Matt Peacock. "To support that, we have had a reshuffle in our tech teams."

The 'reshuffle' could result in around 20 job losses, but the ISP would not confirm exact numbers.

Neither would AOL give figures for the current Netscape Online subscriber base but its findings, that pay-as-you-go figures are dropping, echo those of telco watchdog Oftel. In July, Oftel’s overview of dialup internet access found that 35 percent of all households opted for flat-rate packages, and that figure was rising.

"People are opting for flat-rate packages because in most cases they are more cost effective," said an Oftel spokesman.

ISP Freeserve has also seen a major decline in interest for its pay-as-you-go service but, like AOL, refused to disclose just how big that downturn is.

"Freeserve hasn't added any new subscribers [to its pay-as-you-go service] since last September. All existing AOL subscribers will be offered alternative packages and will be kept informed of all changes, said AOL's Peacock.

"We will not just cut off accounts. The service will be dwindled out," said Peacock. "And we will be looking at a range of light-usage packages, such as buying a certain amount of hours each month for people who don't use the internet enough to benefit from a flat fee."