By Lisa Burroughes, 6 May 1999 00:20
NEWS AOL has confirmed it is testing an 0800 freephone service for Internet access in the UK. The statement followed reports that the Internet service provider (ISP) plans to offer free calls to customers paying a monthly subscription of £14.99. A company spokeswoman said AOL will announce a series of price packages for Internet access next week. James Eibisch, research manager of European ISP markets at IDC, argued that AOL is likely to follow the same pricing model that Cable & Wireless Communications (CWC) has adopted, offering flat-rate Net access for residential customers that varies according to levels of usage and is based on evening and weekend use. "AOL will limit the service in terms of time because that is the kind of company it is - when it first launched in the US as an ISP it did so on the basis of usage metering," he said. Last month, electronics retailer Tempo announced an ISP service that will offer free off-peak calls and no subscription fee. This followed X-Stream's offer of totally free off-peak Net access as a promotional exercise during March. X-Stream MD, Paul Myers, said the cost of setting up a completely free service is such that AOL would have to consider a limited package. "It would cripple them to offer an unlimited free access service because people would just never hang up, and they would still be paying between 1p and 2p per minute for the cost of the call," he explained. Eibisch said there is a valid market demand for flat-rate products to run in parallel with subscription-free ISPs. "The industry is consolidating while the market is diversifying, so that fewer companies are offering more and more diversified services. A 'one size fits all' pricing strategy does not work," he said.
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