Busy signals at America On Line create headaches for businesses.

America On Line Inc.'s inability to handle increased user demand has left local business subscribers ready to jump ship.

While AOL's service problems have nagged thousands of general users, businesses are especially vulnerable because they have come to rely on the online service for everything from e-mail to advertising.

"'Almost On Line' hasn't been a real good thing for us," said John Jacobson, who along with his wife Roberta runs Kids Play, a child care center in Granada Hills.

Like other AOL users, Jacobson said he is regularly faced with busy signals or recorded messages when he tries to access the service.

Kids Play advertises through a message posting in AOL's Digital City L.A., an arena devoted to local businesses, entertainment and news.

Since the December billing shift, Kids Play has seen a "tremendous drop off in e-mail from new customers," Jacobson said.

"I can only conclude it's because they (the customers) can't get on," he said.

The Jacobsons had planned to develop a Web page on AOL for Kids Play, he said, but with the recent access difficulties, "that has become a much lower priority."

Since the Virginia-based AOL made the shift from charging an hourly rate to a flat fee of $19.95 per month, members have spent an average of 32 minutes on line per day, more than double the amount spent in September, according to the industry journal Computerworld. Similarly, AOL users spent 102 million hours logged on in January, compared to 45 million hours in September.

Because the company failed to adequately upgrade its capacity for traffic during peak hours, users have had trouble getting and staying online.

Two class-action lawsuits have been filed against AOL because of the problems. And a recent settlement between the company and a coalition of 36 states attorneys general led AOL to pull all advertising for new members, to install thousands of extra telephone lines and to offer limited rebates.

The steps have not eliminated access difficulties.

"I don't even bother going on during peak periods," said David Orozco, who advertises his Highland Park-based Tour Los Angeles travel agency through an AOL Web page.

Beyond potentially missed customers, Orozco said, just getting out his own e-mail has become a scheduling exercise that forces him to wait until late at night or weekends to log on.

Because of financial constraints, "I have to be with them now," Orozco said. "But if I make enough money to afford my own (server) I'll do that."

Even companies that don't rely on AOL for customer access have been affected by the service's clogging.

"We rely on AOL to transfer a lot of data between our independent contractors (who prepare reports and studies)," said Larry Kosmont, president of Kosmont & Associates Inc., a real estate consulting firm in Sherman Oaks. "We can't get through to each other or to our key clients. It's hurting our ability to ship product."

Kosmont said the service has become unacceptable from a work standpoint, and that his own frustration has reached a boiling point.

"I've noticed all these great deals now from the telephone companies, and I've penciled in for my things to do next week looking into switching the service," he said.

Taking an even more active approach is Russell Minchington, president of the Santa Monica-based clothing manufacturer AKA Los Angeles.

Though a three-year AOL member, Minchington has already been surveying other internet access providers to find a more reliable alternative. Though he feels a certain loyalty to AOL, "frustration is the main factor at this point," he said.

AKA's Web page, which the company uses to advertise products and company information, has seen hundreds of "attempted hits" since December, in which Web surfers try to log onto the page but can't, Minchington said. "That didn't happen before."

America On Line officials would not comment on how the service problems have affected business customers.

For their part, local Internet access providers have seen a boost in new members resulting from the AOL difficulties.

Kirsten Kappos, a spokeswoman for Earthlink Network Inc. in Pasadena, said Earthlink has seen several companies switch over from AOL, and her company has even published a "Guide for AOL Graduates" to ease defectors' transition to their service.

"This has been a great opportunity for small (access providers) who concentrate on service and supply," said Garry Hipsher, president of Culver City's Pacific Internet, which sells Internet equipment to providers. "They're enjoying a real growth in business because of the frustrations (AOL) users are experiencing."