AOL UK responded to the increasingly competitive UK internet service provider market with a three-pronged swipe at dialup call charges and barriers to consumer internet take-up. The ISP will offer its subscribers dialup access at the off-peak local call rate of a penny a minute, no matter what time of day they call. This represents an almost 75% discount on peak-time calls from British Telecommunication Plc.
AOL UK, a division of Bertelsmann AG and America Online Inc’s AOL Europe, said that the new pricing is made possible by deals with its telecom company partners. The company said it managed to leverage its size and strong brand to achieve the deals, which will see users dialup via a toll-free 0800-prefix number, and be billed the penny a minute by AOL, with an upgrade to its existing billing system, rather than their carrier (usually BT).
AOL admits that this means its cut of revenues from each dialup has been slashed as a result, but that its brand was in need of a pick-me-up in the UK market, which is dominated by subscription-free ISPs. Although AOL UK launched subscription-free Netscape Online in the UK last month, this is the first time the firm’s flagship brand has been given a makeover since the ‘free’ ISP blossomed 12 months ago.
In addition to the ‘Off Peak All The Time’ offer, the ISP will offer 10 hours trial access free of subscription fees and call charges, worth at least 6 pounds ($10). The Light Access scheme is also updated, with subscribers getting 3 hours per month online time for 4.95 pounds ($8) including call charges, again using a freephone number.
Freeserve Plc, AOL UK’s main competitor and consumer ISP market leader, yesterday also announced a free dialup offer. By using a special prefix on their regular telephone calls, users can earn up to 10 hours of toll-free online time per month. The deal is in conjunction with telco Energis Plc, the infrastructure provider for and major shareholder in Freeserve. Users that spend 10 pounds ($16) per month on calls using Energis receive 10 free hours with Freeserve.
That in mind, critics will argue that AOL’s latest offerings smack of desperation. The firm has been losing subs hand over fist to the subscription-free providers, but needs to attract new users while keeping the subscription fee that is core to its business model. How much a workday daytime discount is worth to AOL users – mainly working families – is debatable, but AOL claims that by reducing the cost of peak-time usage, it is encouraging more daytime use. Small businesses using dialup connections, on the other hand, could gain big savings by taking up the offer.
It has been piloting a toll-free 0800 access service without the penny a minute charge since May. Yesterday’s launch suggest a commercial offering of this service has been shelved for the moment, but AOL says it is still carrying out the trials. Its eventual goal is to provide subscription-based unmetered net access, as it does in the US, but says it finds itself hampered by the incumbent carrier’s reluctance to lose revenue.
