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Thursday, 28 September, 2000, 07:59 GMT 08:59 UK
Freeserve losses double
Freeserve web page
Freeserve: fuel crisis delayed capacity upgrades
The UK internet service provider Freeserve said it was rolling out an internet television portal as it announced that losses doubled in the first quarter of 2000/2001.

It said the portal would be pre-set on Bush televisions and set-top boxes sold through stores owned by Freeserve parent company Dixons and would be available on ONdigital's internet TV service ONnet.

Pre-tax losses stood at 17.818m in the 16-week quarter to 19 August against 8.555m in the same period of the previous year.

Turnover was 14.6m, up by more than four times from last year's 3.4m.

Loss leader

Analysts said investor interest would be focused on the progress of unmetered access services, which Freeserve is selling at a loss as it attempts to build its market share.

Freeserve said the number of subscribers to the service - said previously to stand at 140,000 - had risen to more than 250,000 as of 24 September.

Chief executive John Pluthero said: "As we extend the availability of unmetered access we will drive more users to our portals...increase time online and generate higher e-commerce and advertising revenues."

The total number of active registered accounts, which included Freeserve's basic service, had reached 2.053 million by the same date.

Freeserve shares opened 1-1/2 pence up at 244p but remain well below a peak of nearly 10 reached earlier this year.

Capacity constraints

The results come two days after the company said it would increase network capacity by 25% by the end of the week in an attempt to ease problems caused by heavy demand for unmetered access.

A Freeserve spokesman said customers had been intermittently unable to connect to the service in the past few weeks because of "capacity constraints caused by demand for unmetered access".

He said the company was working with its telecoms partner Energis to upgrade capacity.

New modems were due to have been installed two weeks ago but this had been delayed because of the fuel crisis, Freeserve said.

Installation of the new modems finally got underway on Monday evening and had been half completed a day later.

By the end of the week, capacity would be 25% higher, the spokesman said.

"We will be continuing to upgrade capacity on a demand basis," he added.

Bad publicity

Providing free unmetered internet access has proved a headache for all ISPs. They have struggled to make their services pay and had their networks overloaded with demand.

Altavista flew into a storm of bad publicity last month when it admitted it had never actually launched its much-publicised unmetered service.

CallNet0800 and LineOne were among those also cancelling plans, while Virgin delayed introducing its service.

America Online recently became the latest entrant to the unmetered access market, offering some existing customers a 14.99-a-month deal.

Freeserve offers two unmetered access plans: a 24-hour, seven-day-a-week service and an off-peak service.

Both plans are only available to existing Freeserve members who are also customers of British Telecom. Availability of the 24-seven service is additionally restricted to 10,000 new users a month.

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See also:

22 Sep 00 | Business
AltaVista heads for flotation
21 Aug 00 | Business
ISP's free service never existed
30 Aug 00 | Business
Altavista UK boss resigns
22 Aug 00 | Business
What next for unmetered access?
16 Jul 00 | Business
Freeserve talks 'back on'
26 Jun 00 | Business
Freeserve falls on bid blow
25 Jun 00 | Business
Freeserve takeover talks collapse
08 May 00 | Business
Dixons wants to sell Freeserve
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