Freeserve goes head to head with AOL over unmetered

Freeserve Anytime offers unlimited Net access for £12.99, undercutting AOL

Freeserve (quote: FRE) is reopening the old rivalry with AOL Friday as it launches a new unmetered service based on the Friaco agreement.

Freeserve Anytime -- due to launch in the middle of January -- will be priced at £12.99, undercutting both AOL and World Online's offerings (at £14.99). Friaco (Flat Rate Internet Access Call Origination) is generally regarded as a more robust and financially sustainable way to roll out unmetered than the current system.

Freeserve is confident it will continue to steal customers from AOL. "We are the biggest ISP and we are still [stealing away] AOL's customers. We have two million users in the UK compared to their half a million. Already on our unmetered service we have 250,000 users," says a Freeserve spokeswoman. "We are already in the position AOL wants to be in."

Until now Freeserve has relied on BT's SurfTime to offer unmetered. This has been costly for the ISP -- and no doubt added to its sliding share price which cumulated in the company being removed from the FTSE 100 index in October.

Users have also had problems getting on the service with Freeserve experiencing expansion difficulties since the summer. "We have had capacity problems partly because other ISPs packed up and went home so we had unanticipated demand," the spokeswoman explains.

Freeserve is confident Friaco will solve all these problems. "All ISPs have been waiting to get their hands on Friaco. It is both better for ISPs because it is financially sustainable and better for customers because it is run on an IP network dedicated to Internet traffic."

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