This is the latest move in AOL's ongoing transition to an ad-supported business model from its traditional subscription-based model. The company wants to bolster a healthy portal and an online advertising business built on content from parent company Time Warner. With this offer, AOL is hoping to attract new users, as well as retain a relationship with the subscribers who drop their AOL dial-up accounts.

"By giving AOL's members the opportunity to stay with us free of charge as they shift to broadband, we will significantly accelerate AOL's transition to an advertiser-supported business model," says Time Warner's chairman and CEO, Dick Parsons.

It is critical to retain former dial-up subscribers as AOL users, says Time Warner president and COO, Jeff Bewkes. AOL members make up 36% of US monthly unique visitors to the AOL network of sites and services, but they generate 80% of the page views, he says. This means that they have a disproportionate positive effect on the consumption of AOL online ads.

Key to this deep engagement is their use of the integrated AOL proprietary PC software, to which subscribers lose access when they cancel their dial-up accounts, Bewkes says. "We are fixing that problem. We are going to stop sending our members to our competitors," he adds.

Although the company said in a statement that it would offer the freebies specifically only to broadband users, AOL representatives later clarified that dial-up users also qualify.