Thursday, March 4, 1999 Published at 02:15 GMT
Free ISP goes call-free
X-Stream offers free Net access funded by on-screen ads
By Internet Correspondent Chris Nuttall
Amid signs that Freeserve is becoming a victim of its own success, the free Internet access service that inspired it is offering a birthday bonus to its members.
X-Stream, launched on 8 March, 1998, is allowing its 198,000 registered subscribers to connect toll-free on an 0800 number on its first anniversary on Monday, rather than a local-call-rate number. The totally-free Net access runs just from 1800GMT till midnight.
Non-members can join up before Monday by downloading software from its Website or by telephoning for a CD-Rom.
"As the first to offer free access, we stunned the market," says X-Stream's managing director Paul Myers. "Our innovation, courage and success forced the likes of Dixons, BT and Tesco to reorganise their strategies and offer free Internet access. Now we're doing it yet again."
X-Stream's revenue stream comes from advertising however, unlike those that followed it, who rely on a share of the local-call access charges to cover their costs.
Freeserve's lines are busy
Dixon's Freeserve, launched in September, has now reached 1,350,000 accounts, with a million of those active.
It is the UK's leading and fastest growing Internet Service Provider (ISP). But users have been increasingly complaining of slow access speeds and an inability to connect at all at peak times.
Industry statistics suggest only one in four people can connect at peak times on Sunday evenings.
A Dixons spokeswoman told BBC News Online the problem was not at Freeserve's end.
"Our modem farm has never maxed out. Some customers have experienced difficulties at peak times due to interconnect problems at the local exchanges. It is the telcos that have got problems," she said.
The spokeswoman denied reports that Freeserve was looking for a new network provider. It currently relies on Energis to the local exchange, with BT usually providing the final local loop access to the home or business.
Freeserve won Retail Week's new product launch of the year award on Wednesday. It was named best consumer ISP at last week's Internet Service Providers Association awards.
UK's Net savings over US
The telecommunications regulator Oftel told the Commons' Trade and Industry Select Committee on Monday that UK Net users could now get cheaper access than their counterparts in the United States, where local calls are usually free.
It produced tables for MPs which showed someone online for 20 off-peak hours a month with Freeserve, and with their phone line to the exchange provided by Telewest, paid the equivalent of $21.87 a month compared to $39.77 for a user in America.
"New OECD comparisons which take account of the new subscription-free Internet access services, show that, at off-peak periods, the cost of Internet use in the UK is amongst the lowest in the World and at peak is in line with OECD averages," it said.
It pointed out that local calls in the US were not exactly free: "The costs of free local calls tend to be met either through a higher fixed rate charge (sometimes accompanied by a limit on usage) or by cross subsidy from other tariffs, which are therefore higher than they would otherwise be."
CUT disagrees with statistics
But the Campaign for Unmetered Telecommunications (CUT), a group of Net users pushing for free local calls in the UK, has criticised Oftel's reliance on the OECD report.
"Firstly, taking a fixed, small time (40 minutes a day) as representative , home Internet usage artificially inflates costs in countries where local phone calls are not paid for by the minute. For example, in most cases US and Canadian costs would be the same no matter the amount of online time per month, whereas UK costs - even with a 'free' ISP - would almost invariably increase with increasing online time," said CUT in a statement.
"Secondly, some countries (in particular, Australia) have unmetered local calls and complex ISP tariffs, with many ISPs offering several different bases of charge: given this, we cannot see how a meaningful average cost could be calculated."
10,000 a day in UK get Net
A National Opinion Poll survey released on Thursday suggests 10,900 new users are now getting onto the Internet every day in the UK.
Its research indicated 10.6m adults used the Web, e-mail or other Net services in 1998. Usage from home had grown from 3.4m in 1997 to 6m in 1998. The figures were derived from screening 21,000 households and 1,000 telephone interviews.
"These findings suggest that Internet usage in Britain has undergone spectacular growth in recent months," said Rob Lawson of NOP Research Group. NOP said a major factor in the boom was the launch of Freeserve.