Finally, Free Internet Calls In Europe

Welcome Guest. | Log In| Register | Membership Benefits

May 06, 1999 (12:17 PM EDT)

By Madeleine Acey,

Fierce competition has finally brought free local phone calls to Europe for Internet access.

But the competition has not necessarily been between traditional ISPs. The biggest push toward free services in the United Kingdom has been from major chain stores with well-known brands.

Newspapers and bookstores have gotten in on the act, but electrical-appliance retailer Dixons started the ball rolling last year with its Freeserve service -- the first to ditch monthly subscription charges.

It makes its money sharing the access call revenue with the telecommunications carrier and hopes to sell a lot of its products online. It also has high charges for support calls.

But last week, another electrical retailer, Tempo, shocked the market with the launch of screaming.net, which can be subscribed to for free. And if you put all your phone calls through its telecom partner LocalTel, evening and weekend calls would be free -- a first in Europe.

Wednesday, America Online jumped on the bandwagon. Knocked from its top slot by Freeserve in terms of subscriber numbers, AOL announced it would trial free calls for a month. However, AOL would still charge a monthly fee of £14.99 ($24.48).

The pressure to drop charges has spread to mainland Europe, according to Phil Lakelin, senior analyst at international telecom consultant company Analysys, in Cambridge, England. "Some countries are going the same way as the U.K. Switzerland has at least half a dozen free ISPs now. Call-rate prices are being forced down, too," he said.

He said recent Internet strikes had helped to force prices down, but it was mostly down to competition.

Still, he was concerned at how the cheap new services would survive. "If the monthly subscription goes and the local calls are free, I can't see how the ISP can make money," he said. He was doubtful about advertising revenue, saying click-through rates were very low. He also said e-commerce was still in its infancy.

Telecommunications Users' Association chairman Bill Meiran agreed and cautioned customers to look for hidden costs. "Nothing's free," he said. "You have to ask, 'Where else am I going to pay?' "

Both Meiran and Lakelin said many traditional ISPs would not be able to join the party."The ISPs have not been very visible, and they don't have the money to engage in big marketing campaigns," Lakelin said.

He said it was the well-known brand names, including the Tesco supermarket chain that would win new customers in their millions -- as Dixons has. "They're good at managing the customer relationship, and they've got people coming into their shops asking about the Internet," he said. "We'll probably see a surge of people getting online."

Lakelin said new regulations had helped bring the cost of local calls down, but Meiran said it was time for dominant carrier British Telecommunications to chop its minimum-call charge.

"We've had a lot of complaints that BT's minimum charge is a problem -- it's 4.2 pence (6.8 cents), plus tax, even for 20 seconds to send an e-mail. It should be one or two pence," Meiran said.

He said the downward pressure was likely to shift to long distance call charges.