The unmetered future according to Freeserve

The UK unmetered internet access market has taken a beating over the last few months, with many high-profile players crashing out of the game because they were unable to cope with what they claimed were unexpectedly high levels of customer demand.

As a result, uk.internet.com, a sister publication of vnunet.com asked a senior spokesman from Freeserve, the UK's largest internet service provider (ISP), to give his views on the future of unmetered access.

Many other ISPs that have been attempting to provide unlimited access packages have given up after being overwhelmed. Why does Freeserve think it will succeed?
It's because of our relationship with a strong and reputable telecoms partner. Energis is one of the largest and most professional telecoms providers in the UK. One of the issues is having modem farms large enough to cope with unlimited access. We are using contention ratios [users per modem] of eight to one - a low ratio. For normal pay-as-you-go, a contention ratio of 25:1 gives a very good quality service. As usage averages out and the heavy-user early adopters get diluted, we think a contention ratio of 10:1 will work.

Many ISPs have had capacity problems, with customers leaving their unlimited service open constantly. How has Freeserve coped with this?
I'm not sure if there have been any cases through Freeserve Unlimited. [But] if people were continually logged on, it would be an issue for any ISP. This is not an 'always on' connection like ADSL [asymmetric digital subscriber line]. This is a narrow band product, on which extraordinarily heavy usage will create capacity constraints.

Many of the failed unmetered providers had business plans that centred on advertising revenues, but they were forced under when they found that income projections did not materialise. What is Freeserve's take on this problem?
It has always been our position to drive our portal through our ISP strength. And it has always been our intention to derive the largest proportion of our revenues from advertising and ecommerce.

What is Freeserve's view on Friaco (flat rate internet access for call origination), BT's unlimited use package for ISPs which will be available from September?
Friaco costs £491 a year per port. We think it's a very good start. If we use a contention ratio of 10:1, then Freeserve can get calls to the local exchange for £4.09 a month. With the back haul costs, you get to a point where anytime internet access in the UK costs under £10 - it changes the economics again. Oftel has stated the first price review for Friaco will be in December of this year. Although there is no indication of how much pricing will come down, there is an expectation that competition will lead to it falling even further. This is very good news for Freeserve.

Following Deutsche Telekom's decision not to buy Freeserve from Dixons, is the firm's future secure?
The strategic discussions over ownership and control of the company would have no bearing on the quality of service. It's not absolutely vital that we are owned by a telecoms provider - we're market leader despite competition from telcos. BT has nothing like our market share.

What unmetered services do you offer?
Freeserve has around 140,000 customers for its unmetered offerings, roughly halved between its Unlimited and Off-Peak packages. There's three standard products: Freeserve No-Ties, the pay-as-you-go model; Freeserve Unlimited [introduced mid-April], which gives 24 x 7 unlimited access if you spend £10 a month on voice telephony or simply pay £10 a month; and Freeserve Off-Peak [introduced at the start of June], which is as much as you can use at evenings and weekends for £4.99. We buy that capacity from BT, which includes a £1 rebate for the consumer. BT advertises SurfTime [its equivalent package] for £9.99, which includes its back haul costs. We can do it cheaper because of our very good working relationship with Energis.

What broadband services does Freeserve plan to offer?
We have been working on ADSL for almost a year. We are creating a standalone broadband portal which will fit as many platforms as possible on launch. BT is saying this will be in late August and we're beholden to its performance. We haven't announced pricing yet. BT has announced £39.99 a month, and we will be competitive with that. [However] ADSL at £39.99 is not a consumer proposition, and it's £35 wholesale. If it starts to come down with local loop unbundling, that will be great for consumers. We would like to see ADSL down to around £20 a month, unlimited narrow band for £10 and off-peak for £5.