AOL, CompuServe merge

The two giants of the international online industry, AOL and CompuServe, have agreed to a merger -- of sorts.

CompuServe is to be sold to Worldcom, parent company of UUnet, corporate Internet access specialists. Worldcom will then swap CompuServe's consumer service for AOL's corporate branch, ANS Communications, with Worldcom putting in a $175m top-up.

CompuServe's UK and European customers will be transferred to AOL Europe, which is jointly owned by America OnLine and publishers Bertelsmann AG. Bertelsmann will also plough a further $75m into the venture to reflect the increased subscriber base.

When the dust settles -- and assuming that the US monopoly regulators allow the transaction to proceed -- America Online will be by far the largest online service, given that this merger combines the previous top two such services.

Compuserve was founded in 1979, well before the current explosion of interest in the Internet, and has sometimes suffered because of its slow links to the Internet at large. However, its plethora of news and technical information from established sources has meant that many of its customers are fiercely loyal to the service.

AOL, meanwhile, founded in 1985, has worked hard to attract newcomers to the online world, but has occasionally had to deal with infrastructure problems -- teaming up with Worldcom should solve these.

The intention is to keep the two services separate, with CompuServe continuing to target those seeking a business focus, while AOL aims for "the mass market", according to AOL's chairman Steve Case. It's thought that trying to mix the two groups of subscribers, both with differing needs and attitudes, would lead to an exodus, probably affecting the minority of CompuServe subscribers more than the AOL users.