RE UK and 'free' ISP access debate.
(Actually it should be called 'subscription free' ISP access
See the following news article;
+ AOL REFUSES TO JUMP ON FREE ISP BANDWAGON IN UK
Former number one UK internet service provider America OnLine
(UK) Ltd still claims to have no plans to drop its monthly
subscription charges, despite a direct challenge from Virgin
Net, which switched to a free model Wednesday. Virgin chairman
Richard Branson claimed his ISP could match subscription-based
AOL in terms of content, which had so far been AOL's last line
of argument against going free. An AOL spokesperson told
Computergram: "It's very flattering that Virgin wants to
imitate us. But we have no plans to go free." AOL claims the
company's international base and strong community spirit among
subscribers should be enough to keep it going strong. ISPs that
charge a monthly fee claim that up to 60% of free-service users
also subscribe to their services, although the numbers are open
to dispute. They also challenge the motives of free ISPs linked
to retailers such as Dixons Freeserve and TescoNet, claiming
the services are used as loss-leaders to direct users to their
home-shopping sites.
A few comments from me;
I dont believe these services are used as loss-leaders, in fact it has been stated that Freeserve will break even within a couple of months.
There is still a huge amount of naivety about how to be connected, and the costs. I spoke with someone yesterday whose sole method of choosing was based on what software was delivered with his computer when he bought it (BT and AOL). Didnt consider Freeserve simply because he didnt have the CD and wasnt interested in AOL because of its communities, just because he had the CD! Therefore AOLs model of bombarding you with CDs may pay off. I get about 2 a week. Some direct mailed, some in magazines, some just seem to materialise out of the aether.
Economy of scale through volume will be key to survival for UK ISPs. The writing is on the wall for all but the largest. IMHO, there will be less than 10 UK ISPs within a year. AOL are definitely going to have a tough time in the UK compared to 6 months ago before free services. However, if Virgin can afford to go 'free' then AOL could also, as they have about 3x as many users.
Finally, this model does not extrapolate elsewhere, as it is crucially dependent on 3 factors;
1)The fact that local calls in the UK are charged on a per minute basis,
2)The ratio of the revenue split of that charge between local/long distance (20:80),
3) Continued regulatory support for (1) and (2). Any change in either could derail the 'free' ISPs overnight.
Joe
|
