AOL flexes its unmetered muscle in France

The future of unmetered dial-up net access in Europe is uncertain. However, in France, AOL is determined to make a success of a market that has proven impenetrable to others, as Suzanna Kerridge finds out...

The future of unmetered dial-up net access in Europe is uncertain. However, in France, AOL is determined to make a success of a market that has proven impenetrable to others, as Suzanna Kerridge finds out...

OneTel France tried and failed. World Online France attempted to offer it but also fell at the first fence. So what makes AOL think it can do any better than its predecessors in trying to offer unmetered internet access in France? The US-based ISP claims it is trying to break France Telecom's stranglehold on the French internet access market and encourage more users to go online by offering unlimited surfing for a mere FF99 (£10) a month. After throwing down this gauntlet, France Telecom retaliated by stating it would be unveiling new - lower, we hope - prices. The battle intensified a day later as supermarket chain Carrefour announced 220 of its stores will offer one million customers a connection to the net bundled with 120 free hours of access for a year-long period. However, against the backdrop of this price war, industry observers claim the real trick isn't to offer low prices but to keep users online for just the right amount of time. Elias Moubayed, general manager of iweb Europe, claims that for the majority of ISPs unmetered access is not a viable business model, mainly for technical reasons. He explained: "You cannot guarantee service, and that's what messed things up for AltaVista [in the UK recently]. One major assumption is that a certain amount of time will be spent online, at certain times of the day, but if there are more users and it's busier than expected, the users get busy signals. Or if they go online at a more expensive time, the ISPs end up paying more for local calls than expected. "If the ISP is not geared up to handle more than the predicted monthly average then the whole thing falls apart technically. The backbone cannot suddenly triple modem capacity overnight - it takes months and most ISPs are only just trying to keep up with the current capacity." This situation was all too real for World Online France and OneTel when they tried to offer unmetered access to French citizens. But AOL is determined. A spokeswoman said the internet giant is working hard to make it possible to succeed where others failed. It is a company hoping its reputation and past experience will win through, said Corentin de Tregomain, marketing director at well-known e-tailer Glaxidion.com. But its competitors are not so certain, claiming AOL France reopened a can of worms when it decided to try to offer unmetered access to France's net surfers. World Online was forced to retract its unmetered access offer in March as it couldn't cope technically with the demand. A spokeswoman for World Online France said: "We were amazed to see how many subscribers wanted our service - so amazed that we didn't manage to answer all the subscribers' calls. Our helpdesk was overworked." But providing it handles signing up subscribers, will AOL manage to provide enough network capacity? "We didn't have enough network, servers or modem capacity to offer a good quality service. We tried to fix it but we couldn't. So we were obliged to withdraw the offer. OneTel also had really huge problems so it will be interesting to see what happens with AOL," warned the World Online spokeswoman. In Germany, many ISPs end up footing the bill as users surf for longer than expected. "Germany has a very different situation. ISPs have introduced a one pence per minute anytime local rate, but users surf for longer than expected and often at peak time, so the provider ends up subsidising costs by paying the telco a higher rate. How can an ISP ever cover its costs?" asked iweb Europe's Moubayed. "Since users cannot be depended upon to surf for a certain length of time or during off-peak hours, ISPs need to realise their long-term survival depends on building the best profile of users for advertisers. Alternatively, ISPs need to be part of, or closely affiliated to, a telco to obtain the lowest possible wholesale phone prices," he added. Bruno Peuch, entrepreneur and CEO of DreamUp, warned AOL had better be able to see through its offer or else face legal problems. "Once OneTel withdrew its offer it was faced with a stack of legal problems because it had accepted subscribers on the basis of unlimited access, but then withdrew the access - thus breaking the contracts," he said. "It is not making a good offer if it cannot support it. We will have to wait and see if it can do what the others couldn't." He added that the unlimited access model could encourage citizens to convert from the Minitel system to the internet. "There is at least one factor in [the internet's] favour - some people are using it because they have had a bad experience with Minitel. It was very expensive for families and there were a lot of very high bills. But now, with the net, you potentially get to pay a small amount for unlimited service, although it is still not free." Whatever AOL does, all its competitors are waiting to see if it can re-launch unmetered access in France and succeed. There are plenty of reasons for it to fail, but AOL has proved its critics wrong in the past.