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Wednesday, May 5, 1999 Published at 13:55 GMT 14:55 UK


AOL empire to strike back

AOL joins and x-stream in offering free Net access calls

By Internet Correspondent Chris Nuttall

AOL is about to unveil its response to the free Internet access revolution in the UK - free access calls using an 0800 telephone number.

The boom in free access Internet Service Providers (ISP) has toppled AOL, the world's leading ISP, from top spot in Britain.

From next week, "a significant number" of trial packs will be sent out to prospective AOL UK members giving them the option of an 0800 (toll-free) number for dial-up access.

This will allow them to stay online indefinitely at no cost other than a monthly subscription. One suggested price for the trial is £14.99.

AOL, with more than 600,000 existing members, also plans a package of announcements next week including new pricing plans and some major e-commerce deals.

AOL trying to catch freeserve

AOL has been overtaken by Dixons' freeserve, which has attracted twice as many members as AOL since its launch last September. It offers no-subscription Internet access.

Dozens of other companies have followed suit, with Dixons' High Street rival Tempo raising the stakes again last week with an offer of free off-peak calls as well as free access.

AOL had been slow to counter the challenge, saying it had no plans to abandon its subscription model. Its free rivals say they can make money from a share of the call charges for connecting to the Internet, revenue from ads on portal sites and e-commerce opportunities.

AOL campaign for unmetered calls

AOL insists its 0800 initiative follows on from its campaign for unmetered telephone calls and legal case against Deutsche Telekom.

In March, a court in Hamburg threw out a new pricing scheme for Deutsche Telekom's T-Online service following a complaint by AOL Germany. The court ordered T-Online to unbundle its six pfennig per minute price for usage and the cost of the local access call.

Andreas Schmidt, President of AOL Europe, said at the time: "This court decision supports our call for flat-rate access for all Internet users. We're calling on Deutsche Telekom to finally 'stop the clock' that has driven up costs for consumers and slowed the growth of the Internet. In the US, flat-rate pricing plans allow Internet access for around DM30 a month."

News of AOL's 0800 deal leaked out when a small batch of packages giving access to the new freephone number were sent out early by mistake. AOL says its 0800 node is now up and running to cater for those who received the packs, but the rest will be posted next week.

In other moves in the Internet provision sector:

  • BSkyB, the satellite broadcaster, has announced it is to launch a free ISP on June 1. The skynow service will include a 40% discount off all standard BT telephone calls for its digital TV subscribers, including calls used for Internet access.

  • Virgin Net is launching " the UK's first national online entertainment and leisure service" on Thursday, to coincide with its offer of free Internet access to the general public. Virgin says it already has 200,000 users of its free access package.

  • The Mirror Group's ic24, which launched last Friday, is getting online gaming content from BT's Wireplay, which itself went free in April.

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