From the Financial Times:
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TUESDAY NOVEMBER 17 1998 Telecoms
Dixons internet service signs up 475,000
By Alan Cane
Dixons, which launched the UK's first free internet service eight weeks ago, is claiming a spectacular success that could have profound implications for the future of the UK internet market.
It says it has 475,000 customers for "Freeserve" - only 25,000 behind the UK market leader AOL, which has been operating in the UK for more than five years, and ahead of Compuserve, which has 400,000 customers.
The largest high street electronic retailer says customers have been joining at a rate of 8,500 a day, 10 times faster than any other UK service provider, since the service was launched on September 22.
Mark Danby, Freeserve general manager, said more than 40 per cent of his customers were new to the internet. "Not only is Freeserve attracting a huge number of users, but we are also growing the UK internet market," he added.
If Dixons' numbers are accurate, the UK's 250 or so internet service providers will have to reassess their key business assumptions. In the US, where the internet market is most advanced, customers typically pay a high subscription fee but calls to the network are free. In the UK, subscriptions are moderate - between £7.50 and £15 a month - but customers pay local call charges.
Dixons is pioneering a new model. Freeserve charges no subscription but aims to profit from offering advertising on its website and by levying commissions on transactions carried out over the internet. Its success thus depends on the UK growth of electronic commerce.
Customers join up by using a free CD available from Dixons, Currys, PC World or The Link stores and by dialling into the network. Freeserve is offered in conjunction with Energis, the telecommunications carrier in which the National Grid has a majority stake, and Planet Online, an internet service provider Energis bought in the summer.
British Telecommunications said it questioned the accuracy of Dixons' numbers. Its "pay-as-you-go" service, BT Click, attracted some 25,000 subscribers in six months.
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TUESDAY NOVEMBER 17 1998 Europe
TELECOMS: France Telecom relies on alliance
By Vincent Boland
France Telecom aims to generate a third of its revenues from international activities by 2006 by capitalising on its Global One alliance with Deutsche Telekom and Sprint of the US, Michel Bon, chairman, said yesterday.
The telecommunications company, which generates about 8 per cent of its total revenues outside France, saw revenues from its domestic fixed-line operations fall 5.4 per cent to FFr69.5bn ($12.27bn) in the nine months to the end of September. Revenues were hit by the big reductions in tariff charges France Telecom made to rebalance prices and meet competition.
Mr Bon said the main impact of the reductions was now behind the company and that he expected revenues from fixed-line operations to begin to rise again next year. But France Telecom wanted to see international operations, particularly in Europe, contribute 15 per cent of revenues by 2001, rising to a third within five years. Further growth would come from the expansion of mobile telephone operations and from its on-line operations.
Mr Bon was speaking in London during the presentation to investors of a FFr50bn offering of shares and convertible bonds that would see the state's stake fall from 75 to 62 per cent.
The company is increasing its share capital by 5 per cent to raise FFr20bn. Mr Bon said FFr10bn of the new funds would be used to pay for the development of its international operations, centred on the Global One alliance, and on Metroholdings, its three-way UK venture with Deutsche Telekom and Energis, the UK telecommunications group.
The remaining FFr10bn of new proceeds will be used to pay for a 2 per cent stake in Deutsche Telekom, part of an exchange of shareholdings between Europe's big two telecoms operators that seals a long-standing partnership.
Mr Bon said indications that the price range would be FFr350-370 per share were entirely dependent on the company's share price in the market before a final price was set at the end of November.
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MONDAY NOVEMBER 16 1998 UK & Ireland
C&W: $1bn European internet expansion
By Our Summaries Staff
Cable and Wireless, the UK's second largest telecommunications group, on Monday said it would spend $1bn over the next five years on a fully integrated voice, internet and data network which would span more than 40 European cities in 13 countries.
The investment, to create one of the world's most sophisticated global communications networks, was in addition to the company's pledge to spend $5bn in the UK over the next three years, the group said.
Expansion plans include the securing of licences to use existing communications capacity from other operators and the development of a high-speed Asynchronous Transfer Mode backbone network. This would link 10 cities in eight countries and would be mostly supplied by Hermes Europe Railtel.
C&W said it would provide Internet Protocol technology which would enable businesses to send and receive data more quickly and securely. This would complement the development of a pan-European high-capacity fibre-optic network, which would connect the commercial centres of Europe. The group said the resulting network would be capable of dealing with 5m simultaneous telephone calls.
The move, which would create 1,000 jobs in Europe, follows the breakdown of plans to form an alliance with Telecom Italia which would have given C&W extensive access to the European market. Talks between the two groups were hampered by a management upheaval at the Italian company.
C&W recently improved its competitive position in the US with the acquisition of the internet assets of MCI Communications for $1.75bn. The group also holds a 54 per cent stake in Hongkong Telecom, giving it a significant influence in the Asia-Pacific region.
Shares in C&W were up 2.11 per cent or 14p at 677p following the announcement.
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This is over a week old, but I missed it earlier and found it interesting:
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WEDNESDAY NOVEMBER 4 1998 Net resources
US and them on trade
Europe may be doomed to become a backwater in e-commerce because of high telecoms costs and lack of expertise
Electronic commerce traverses national boundaries. Anybody, anywhere in the world can compete on an equal footing on the internet. Right? Not quite, says Richard Jones, founder of FortuneCity.com, who has just moved his company's headquarters from London to New York.
A one-year-old community web site offering everything from free e-mail to topical discussion groups, FortuneCity has grown rapidly to rank 31st in the world in terms of internet traffic, according to September figures from Media Metrix, an internet market research group. FortuneCity was the only non-US web site in the top 200 until it moved.
Why uproot a thriving business? To be closer to sources of venture capital funding and in on the latest internet buzz all played a part, says Mr Jones, but the move really arose from more basic issues. The high-capacity leased telephone lines linking his web site to the internet were almost twice as expensive in the UK and hard to get. Finding people experienced in running a "server farm" of 100 or so computers was nearly impossible in London.
Forming transatlantic partnerships with US companies was also proving difficult, says Mr Jones. "People dismiss you as a UK company. There is a perception that you cannot be that good or that successful if you are based in the UK, because the US dominates the e-commerce market globally."
FortuneCity's story shows the disadvantages faced by non-US ventures as they attempt to make headway in e-commerce. In particular, higher telecoms costs are a killer. UK costs are lower than those in some other parts of Europe, but they are still considerably higher than in the US. This hangover from the bad old days of regulated telecoms is a serious barrier for aspiring European e-commerce ventures. No wonder there is a shortage of experienced web site engineers and a perception that e-commerce is dominated by the US.
If this situation persists, Europe may be doomed to be a backwater in e-commerce.
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On the topic of web site rankings, Media Metrix also produces a top 10 list of shopping sites, measured by the volume of traffic, rather than revenues. No surprise that bookseller amazon.com comes in at number one. But the second busiest shopping web site is less familiar.
Blue Mountain Arts ( http://www. bluemountainarts.com) may not get a lot of attention from Wall Street, but it is attracting about 6 per cent of all internet users, according to Media Metrix's latest figures. A Colorado company whose biggest claim to fame is a legal victory over Hallmark Cards, recently settled by the US Supreme Court, Blue Mountain Arts is a publisher of inspirational books and greetings cards.
Its web site is the leading provider of online greetings. The web site is offered as a free "public service" and includes animated greetings cards for every holiday and special occasion - and more. There are thank-you cards and "sorry" cards; wedding invitations and cards to send to an "ex-love"; cards for Thanksgiving and Guy Fawkes Day. Blue Mountain is not really an "e-commerce" site, as it does not sell anything. However, the company is reported to be exploring the introduction of advertising.
When Eagle Eye first mentioned illustrated e-mail greetings about 16 months ago, readers were not at all impressed with the idea of pictures cluttering up their e-mail. But there are now dozens of web sites offering greetings cards. E-greetings ( egreetings.com) - formerly known as Greet Street - has seen its traffic grow from 750,000 individual visitors in January to 3m in September. The company offers a range of free cards and charges $1.75 for more elaborate animated ones.
Postcards, a web site produced by MIT's Media Lab postcards.www.media. mit.edu/Postcards), offers a menu of paintings by the likes of Van Gogh and Monet, courtesy of the Web Museum. Corbis Web (www.corbis.com) lets you choose from a collection of about 500,000 images to send a free electronic postcard, courtesy of Bill Gates, who owns this company.
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E-mail may be the most compelling application of the internet, but there is a new category of services that may become almost as important.
Web calendars - web sites that gather information about forthcoming events related to your personal or business interests and present them in a calendar format - are hot news. With Yahoo!'s purchase of Webcal, one of the pioneers in the field, other web portals are looking for ways to match their competitor. This puts When (http://www.when.com), a one-year-old California start-up, in the frame.
When launched a beta version of its web site this week. The company gathers information about forthcoming events - trade shows or opera performances, sports events or TV listings - and presents them on your personal calendar. The service is free. The company will make money on advertising, sponsorships and transaction fees, says Ted Barnett, chief executive. The latter fees include a percentage of the takings when users buy tickets for events listed on a calendar.
Rather than be gobbled up by another web portal, When hopes to co-brand its services, creating multiple calendars on various portals and corporate web sites.
It is too soon to predict who will win in this field. Yet the potential of web calendars is evident to anyone who has used Hotmail, or one of its competitors. Like the web-based e-mail services, web calendars will make your information accessible from any computer linked to the internet.
The next step may be to combine a web calendar with a desktop electronic appointments calendar. You could look up your calendar from any computer, check or enter new appointments, let colleagues and associates pencil in meetings for you and synchronise it all on the calendar web site.
Some may be supported by advertising, others fee-based, and it is not hard to imagine branded calendars. Perhaps internet service providers will host calendar services.
Web calendars will succeed. The only question is who will profit from them, and when.
Share your views in the Eagle Eye discussion group on the FT web site (http://www.FT.com) or contact Louise Kehoe by e-mail on lkehoe@ix.netcom.com
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