Jonathan Miller, AOL’s chairman and chief executive, told The Associated Press that it no longer made sense fighting an industry trend, acknowledging that AOL wasn’t competitive with its "above-market rate" offering.

Customers "were leaving us over price," Miller said. "They weren't leaving us because they were unhappy."

Encouraged by such trends as its 40 percent jump in ad revenue in the second quarter, AOL figures that by making services free, it can prevent users from defecting to Yahoo, Google, Microsoft and other providers that have offered free e-mail for years.

Rob Enderle, an analyst with the Enderle Group, said the restructuring brings Time Warner Inc.'s online unit in line with "this decade as opposed to the last decade" and lets the company "hold on to the customers they had left."

“Had they done nothing, by the end of the decade, they would have been gone,” Enderle said.

The move marks the end of an era for a company that grew rapidly in the 1990s by making it easy to connect online, giving millions of Americans their first taste of e-mail, the Web and instant messaging through unsolicited discs stuffed in mailboxes and magazines.

In two weeks, the board of Time Warner Inc., which owns AOL, will hear a proposal from Jonathan Miller, AOL's chief executive, calling for a near halt in marketing for AOL's 17-year-old Internet access service, price cuts for existing customers and thousands of layoffs. His goal is to devote all of AOL's energy into building its free Web-based services.

Traditionally, when companies have profitable but shrinking businesses, like AOL's access service, they try to milk as much money as they can from them without investing new cash. Indeed, that is what Mr. Miller has tried to do for the last several years.

Mr. Miller will defend his unusually draconian plan by arguing that trying to wring every last dime from its dial-up subscribers is preventing AOL from being as aggressive as it can in competing with Yahoo, Microsoft and Google on the Web, according to AOL executives involved in developing the proposal. With such powerful and fast-moving rivals, he wants to hasten the pain to speed the recovery.

This plan will require the board to accept lower profits at first until the advertising revenue grows further, the AOL executives said, although they declined to say how much profits would fall and at what rate. (The AOL executives spoke on the condition of anonymity because the plan is not scheduled for public announcement until Aug. 2.)

Across the globe, it's the same story. In France, DSL service that is 10 times faster than the typical United States connection; 100 TV channels and unlimited telephone service cost only $38 per month. In South Korea, super-fast connections are common for less than $30 per month. Places as diverse as Finland, Canada and Hong Kong all have much faster Internet connections at a lower cost than what is available here. In fact, since 2001, the U.S. has slipped from fourth to 16th in the world in broadband use per capita. While other countries are taking advantage of the technological, business and education opportunities of the broadband era, America remains lost in transition.

Today, major cable companies and DSL providers control almost 98 percent of the residential and small-business broadband market. This trend is the direct result of FCC policies that fail to encourage real competition among broadband providers, giving free rein over the market to the cable and DSL giants. The corporate giants are also vigorously fighting to stop cities and towns from building "Community Internet" systems -- affordable, high-speed broadband services funded in part by community groups and municipalities -- even in places where the cable and DSL companies themselves don't offer service. Yet, like rural electrification projects in the early 20th century, today's Community Internet projects offer the best hope of achieving universal broadband service.

Pew's May 2005 survey indicated that 53 percent of Americans get online with high-speed connections, up 3 percent since December 2004, but described by Pew as a "statistically insignificant increase" that is likely to remain flat or even drop further in the near future.

Analysts attribute the slowdown to a saturation of users, and a reluctance of today's dial-up Internet users to pay more for bandwidth that they don't necessarily need.

"The issue is that the remaining pool of dial-up users today is a different demographic category," author of the report and Pew research director John Horrigan told the E-Commerce Times. "A couple years back, you had people making the bit-per-buck calculation, where the dial-up wait was costly in time, and prompted them to switch. The existing pool of dial-up users is not accessing as many bits."

There is also the possibility that someone could have set up the unsecured connection as a trap. Experts say it's possible for the network subscriber to gain at least partial access to your computer, read your e-mails and see the pages you visit if you are using their connection. Any personal information you send online could then be compromised.

So while pirating your neighbor's Wi-Fi it may seem like a good way to siphon a free service, you may end up feeling pretty stupid if you get a summons for sneaking a peek at the latest sports scores or your favorite Web sites are the topic of conversation at the neighborhood Christmas party.

In 2000, the OECD said the U.S. ranked third in Net users connecting at high-speed among the top-30 world economies. The next year it fell to fourth. Now it's 11th, according to the OECD. And fast connections in the U.S. are slower than in many other countries. A top-of-the-line cable modem in the U.S. carries five megabits per second, while broadband connections in Asian countries like Japan and South Korea are often 20 times faster. South Korea is, in fact, the world leader in broadband. And unlike the U.S., it has multiple companies offering most of the country DSL lines that are also faster than what's available in the U.S., thanks in no small part to government encouragement and sponsorship.

Many critics point the finger at Washington for not fostering the kind of competition that has allowed Canada's broadband market to thrive and led France -- not exactly known for fostering capitalist competition -- to boost its broadband penetration from 12% in 2003 to a forecasted 41% next year. If cable companies were forced to open up their lines, over-night 80% of the U.S. would have more than one broadband supplier to choose from. Theoretically at least, that would drive down prices and force companies to offer enticing service packages like phone and TV delivered via the Web.