Investigations

AOL Promised Unlimited Internet in 1996. It Forgot to Build Enough Modems.

In December 1996, America Online did something customers had been begging for: it stopped charging by the hour and offered unlimited access for a flat $19.95 a month. Customers responded by logging on and never logging off. Within weeks, AOL's modem banks couldn't handle the load, millions of people got nothing but busy signals, and roughly 44 state attorneys general opened investigations into a company that had, technically, delivered exactly what it advertised — just not to anyone who actually tried to use it.

A bank of dial-up modems, the kind of infrastructure AOL ran out of in 1996. Photo: Richard Masoner / Cyclelicious, Wikimedia Commons, CC BY-SA 2.0.

Unlimited Access, Finite Modems

AOL's flat-rate switch was a direct response to competitive pressure — customers wanted the internet the way cable worked, one price, no clock running. The problem was infrastructure, not intent: AOL had built its network assuming people would dial in, do their business, and dial out, the way hourly billing incentivizes. Remove the meter and people just... stayed connected, tying up modem lines for hours at a time. AOL hadn't built enough modem capacity for a world where nobody had a reason to hang up, and by January 1997 an estimated one in five subscribers reportedly couldn't get online at all during peak hours.

Forty-Four States Wanted Answers

The backlash wasn't just angry customers — it was official. State attorneys general across the country investigated whether AOL had misrepresented a service it couldn't currently provide. On February 4, 1997, AOL accepted an Assurance of Voluntary Compliance with attorneys general from roughly 44 states, agreeing to give affected subscribers free hours of service, pause new-subscriber advertising until capacity caught up, and commit publicly to fixing the busy-signal problem rather than just apologizing for it.

The Fix Was Boring: More Modems

AOL's actual remedy was unglamorous — spend heavily to expand modem banks and network capacity until supply matched the demand the flat rate had unlocked. It worked, eventually, and "unlimited internet" became the assumed default for every provider that followed. The episode is a tidy preview of a pattern that would repeat for decades: offer something without a cap, discover the cap was doing load-bearing work you didn't know about, and spend the next year explaining that to regulators instead of to a product manager.

Filed from public reporting:

Apeel's Grape Seed Coating Once Kept Six in Ten American Supermarket Avocados From Spoiling. Then the Internet Found the Safety Data Sheet for a British Degreaser Also Called Apeel.

Apeel Sciences began in 2012 with a $100,000 grant from the Gates Foundation, awarded to a materials scientist named James Rogers to reduce the amount of food that rots between the farm and the plate in countries without reliable refrigeration. A second grant of about $1 million followed in

A Texas Power Company Charged $9.99 a Month to Let Customers Pay Exactly What the Wholesale Market Paid. In February 2021 the Market Paid $9,000 a Megawatt-Hour, and Griddy Drafted It Straight From Their Accounts.

Griddy Energy, a small Houston company that launched in 2017, sold Texans a simple idea. Most households in the state's deregulated electricity market pay a retailer a fixed rate, and the retailer carries the risk that wholesale power will cost more than it charged. Griddy removed the retailer&

Australia Paid Up to $1,600 a Home in 2009 to Insulate a Million Ceilings in a Year, Using Installers Who Signed Up Online. Its First Industry Meeting Heard New Zealand Had Tried This and Three People Electrocuted Themselves.

On 3 February 2009 Kevin Rudd announced the Energy Efficient Homes Package, part of a $42 billion stimulus plan meant to carry Australia through the global recession. Its centrepiece, the Home Insulation Program, offered free ceiling insulation worth up to $1,600 a home, with a target of 2.2

Subway Told Australian Customers Its Footlong Was a Trademark Name, Not a Measurement of Length. The US Trademark Board Ruled It Was a Measurement of Length and Refused Subway the Trademark.

In January 2013 Matt Corby, a teenager in Perth, bought a Subway Footlong and, as the United States Court of Appeals for the Seventh Circuit would later put it, "for reasons unknown, decided to measure it." It was 11 inches long. He photographed it next to a tape