By Kevin Murphy Freeserve Plc, the UK’s biggest consumer virtual internet service provider, will join British Telecommunications Plc’s trial of ADSL internet access, the same day its shares fell below the price they were offered in last month’s IPO. BT has been piloting ADSL in London for several months and has recently opened the doors […]
By Kevin Murphy
Freeserve Plc, the UK’s biggest consumer virtual internet service provider, will join British Telecommunications Plc’s trial of ADSL internet access, the same day its shares fell below the price they were offered in last month’s IPO. BT has been piloting ADSL in London for several months and has recently opened the doors for ISPs to trial reselling the service to users in these areas, to get a taste of how their service will fare when BT begins wholesaling the technology at the beginning of next year.
BT says consumers will be able to use ADSL for approximately 40 pounds ($64) including rental of ADSL modem, plus reseller mark-up, per month, contrary to some reports in the trade press that indicate a cost closer to 200 pounds ($324). The latter price, says BT, is how much a company would pay for a business quality service. The key differentiator between the business and consumer service will be the capacity of the connection between the BT local exchange and the network of the reselling ISP, as well as how many simultaneous users it will handle. The quality of the first/last mile connection to the exchange should be the same, according to BT.
FreeserveÆs participation in the trial will begin November 22, and run until a commercial service starts in March 2000. At first it will be limited to London and Manchester, rolling out to Birmingham, Leeds, Glasgow and Edinburgh as the trial progresses. The firm has not yet decided how much mark-up to charge its trial customers, or whether to mark-up at all.
On the face of it, the announcement by Freeserve of a fee-paying service with opportunities for innovative multimedia content should have been received well. One criticism leveled at the ISP is that the lack of subscription fee means a value per customer is hard to attain, unlike fee-charging competitor AOL UK. But yesterday Freeserve’s share price plunged despite the ADSL revelation and another weekend announcement relating the creation of a consumer insurance portal.
By close of trading, Freeserve’s shares had sunk almost 7% to 1.45 pounds, going as low as 1.37 pounds at one point, the first time its share price has fallen below the August 2 offer price of 1.50 pounds and considerably lower than its high point of almost 2.50 pounds. The company was not willing to comment on the decline due to a pre-report closed period. Freeserve will announce its maiden quarterly results next Tuesday, and the price fall could be indicative of a nervous market.