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By Tony Hallett, 24 September 1998 16:12

NEWS Almost six months after being acquired by Scottish Telecom, Demon Internet has announced it has reached the 250,000 subscriber mark, and has unveiled plans which involve a £20m investment in two STM1 transatlantic links. The first of the new 155MB STM1 links goes live this month, and Demon claims the capacity is needed to meet the increase in subscribers. Demon remains the UK's largest Internet service provider (ISP) in terms of subscriber numbers. The company felt being bought by Scottish Telecom would help it maintain its position. Roy Bliss, Demon Internet's managing director, told Silicon.com: "We get to use the best parts of Scottish Telecom - their network infrastructure, their call centres and other parts of their business. We are migrating to Scottish Telecom from lines we previously used." The acquisition made sense to many analysts who say ISPs have to do deals with telcos to control infrastructure and therefore be able to offer customers guaranteed high levels of service. A month ago, Planet Online sold out to Energis for similar reasons. However Demon, which charges £10 per month plus VAT for standard dial-up access, was less enamoured by an announcement this week of Dixon's free Internet access service. "There may be a place in the market for that kind of thing, but it lacks practical judgement, Bliss said. The Demon boss is not alone in his scepticism. Others have doubted whether Dixons and Energis' Planet Online subsidiary can turn a profit merely through sponsorship, pulling people into the high-street shops, and not having to bill customers. A technical support line which costs £1 per minute may deter users rather than prove a cash source.