AOL Offers Flat-Rate Net Access in UK

In a move aimed at allowing its subscribers to spend more time — and do more shopping — on the Web, America Online, Inc. (NYSE: AOL) has said its UK division will offer Internet access for a flat monthly fee.

The service, which will be rolled out in stages starting with the longest-standing members, will cost 14.99 British pounds — about $21 (US$) — per month, including all telephone charges, AOL said. Those who have been with AOL the longest will be able to switch immediately, effective on the next billing date, with others to follow in subsequent weeks.

AOL said it expects to offer the flat-rate plan to all UK consumers as soon as telecommunications providers are able to provide unmetered network access. In the meantime, AOL is offering to waive the first month’s subscription fee to new members, who will also receive up to 24 hours of free use.

Clearing Hurdles

AOL said the British regulators’ mandate to British Telecom, the UK telephone company, to offer Internet service providers a wholesale, flat-rate tariff, enabled it to provide British consumers with the same flat-rate service that is available to U.S. customers.

According to AOL UK managing director Karen Thomson, the new plan “will transform the interactive medium into a true mass-market phenomenon in the UK.”

Added AOL UK spokesperson Matt Peacock, “What we are doing is pitching this very much at a mass-market price with none of the obstacles other services carry, such as per-minute charges.”

Three-quarters of UK households are not online, Peacock told the E-Commerce Times, and “the thing that stops them from getting online is the cost of that per-minute phone bill.”

AOL competitor Freeserve, which says it has more than twice as many UK members as AOL, offers subscription-free Web access. AOL’s service, said Peacock, includes free telephone support and contains no other charges.

AltaVista, a unit of CMGI Inc. (Nasdaq: CMGI), reportedly rolled out a flat-rate plan earlier this year, only to put the plan on hold after a few months because the British Telecom service made it too expensive.

The phone charges made for a “suicidal business model,” said AOL’s Peacock, adding that his company “can do this and sustain it.”

UK Home Net Use Up

Forrester Research says one-fourth of the UK population uses the Internet regularly, with home access now accounting for 74 percent of Web use.

“Subscription-free ISPs continue to drive adoption, and their profile and awareness is clearly visible in Web users’ behavior,” said William Reeve, group director of European data products, in releasing the Forrester survey in June. Fifty-six percent of users see their ISP’s home page when they log on, Reeve said.

AOL reaches more than 4 million households across Europe. In the U.S., the company has more than 24 million members, and its CompuServe affiliate has more than 2.8 million.