The June 14, 1999 issue of "Business Week" has a fascinating article on the difficulties facing AOL in Europe. The article is entitled "'I Claim This Land...Whoops!' AOL is meeting stiff -- and free -- resistance as it heads abroad." Unfortunately, while the article has been posted online, I cannot post a URL because you need to be a subscriber to either the online of print versions of the magazine. The article does not specifically mention X-Stream.
AOL anticipates that its domestic growth will begin to taper off during the year 2001 and is looking overseas, particularly in Europe, to fuel its future growth. Its goal is to be either the number 1 or number 2 ISP in each of its markets.
The article talks about how AOL may be forced, by competition in both the UK and other parts of Europe, to offer a free version of its service. The free version might charge extra for such services as chat and instant messaging. AOL would continue to offer a premium service and feels that both services would survive. British Telecom offers differentiated services and Virgin Net is expected to do the same. The article does note, however, that some of the freebies have begun to add content to their sites.
"Consumer-electronics retailer Dixon Group PLC's launch of Freeserve has spawned 77 copycats, says analyst George O'Conner of British investment bank Granville PLC. That accounts for 45% of Britain's market, estimates market researcher International Data Corp. The new Internet service providers (ISPs) range from British Telecommunications PLC's BT Clickfree to the Virgin Group's Virgin Net to Microsoft Network, slate to start a British freebie on June 8.
"Now, ISP giveaways are popping up elsewhere in Europe...'The genie is definitely out of the bottle, and consumer Internet services are likely to all go free in Europe,' says media consultant Michael A. Chamberlain at Arthur D. Little Inc. in London."
The article goes into the economics of the free ISPs, which we are already familiar with, and talks about how AOL is fighting the European metered phone pricing on the regulatory front.
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