Dream is over for UK ISPs

1999-10-15

Just as the world was looking to the UK as leading the way in the free ISP market, the ISPs appear to have dropped the baton.

Let’s take some examples. Currantbun.com, the News International ISP being offered to readers of the mass-market paper The Sun, has been canned to be replaced by Bun.com. Freeserve shares are now worth less than the IPO price. AOL UK subscribers are threatening to walk out on the service provider. To cap it all, Screaming.net has been indicted by the consumer programme WatchDog with paper evidence of customers being charged for so-called free services.

What is going on? Well, in reality, the dream could not sustain itself. The fact is that there is no verifiable revenue model for free ISPs, as Freeserve has discovered to its chagrin. Given this, all that is left is the promise of market share or, at least subscriber share. “Get me the list of subscribers and then they will be my captive audience for whatever comes next.” Trouble is, as we all know, the audience is anything but captive, particularly when the ISP can offer very little that is not being given away elsewhere on the Internet. The site provides news? Well, so does the BBC. And so on. Also, “whatever comes next” hasn’t come, at least not yet. We expect ASPs to be a huge market, initially for businesses but ultimately for consumers as well – however this is waiting for the bandwidth bottleneck to be removed. We also expect online shopping to take off but so far it hasn’t given ISPs a differentiator over anyone else. The fact is that the model is the wrong way around: a free Web connection is a bonus to be provided to customers of a given service, rather than getting a motley band of subscribers together (I include myself in this) and trying to sell them anything under the sun.

ISPs in the UK started the free trend and now have little choice but to deliver on it. This they will only be able to do when they offer a truly differentiating range of services to the UK consumer. In the meantime, we can expect a continuation of the turmoil that we are witnessing right now.

(First published 15 October 1999)