Long-rumored and and late in coming, AOL's decision to offer many of its services gratis is now official, announced by parent Time Warner this morning.

The announcement that AOL services would be offered free to broadband users, beginning in September, was made in conjunction with the earnings release from Time Warner, writes CNNMoney.com. The company hopes to benefit from, and will rely on, the rapid growth of online advertising. Time Warner claims that the new plan will not have a negative impact on AOL's earnings this year, and that operating profits for AOL should grow from 2007 through 2009.

AOL had already begun to offer more of its content, including news and streaming audio and video, for free on its free portal, AOL.com, to increase traffic and boost ad revenue. But AOL generated only 22 percent of its sales from online advertising in the second quarter. Advertising grew last quarter by $129 million from the same period in 2005, or $516 million over the year if it can sustain the growth rate, writes the Associated Press.

AOL plans to cut as much as $1 billion in costs at AOL next year, but revenue will take a hit as subscriber revenues decline. AOL said it would continue offering dial-up access (for a monthly fee) to existing dial-up subscribers. AOL finished the second quarter with 17.7 million subscribers, down from 20.8 million a year ago.

"We'll now be able to maintain and deepen our relationships with many more members who are likely to migrate to broadband. Providing them with their familiar AOL software and email for free, over any broadband connection, will be critical to our future success," said AOL chairman and CEO Jonathan Miller in a statement.