Freeserve riding high in new millennium

The pioneering 'free' ISP is still proving popular with Brits wishing to get online, with 100,000 new users since November

The UK's first free service provider, Freeserve (quote: FRE) is riding high according to financial results announced Thursday.

Despite the proliferation of free ISPs, and BT's announcement it is to offer unmetered access, Freeserve is still proving popular with Brits wishing to get online -- with 1.675 million active registered accounts as of 2 January, 2000, according to its figures.

The figures represent an increase of 100,000 users since November. Freeserve also announces that churn is down -- standing now at eight percent, down from 9.5 percent in the first quarter.

Freeserve's pre-tax and pre-exceptionals loss for the quarter to 13 November was £3.6m, compared with £5m in the previous quarter. In line with many technology stocks, shares fell over seven percent Wednesday as markets felt a wave of post-millennium bug jitters. Early last month, Freeserve shares took a dive following BT's announcement it will introduce unmetered access packages in the UK.

Freeserve's chief executive John Pluthero believes the latest results prove Freeserve is still the ISP of choice for UK consumers and hopes to extend the service beyond PCs. "We have the most recognised Internet brand in the country. We are building on this to ensure that Freeserve is available wherever the Internet can be accessed," he said in a statement.

Nick Jones, analyst with research firm Jupiter, is not convinced Freeserve will be able to maintain its growth. "I think the growth rate has slowed and the days of adding 500,000 a month are well and truly over," he said. While Freeserve claims that time spent online has grown by 14 percent, Jones is sceptical. "They have spun that. My research suggests people are staying online for an average of 6.65 hours per month compared with 6.56 hours the previous quarter, which is not a massive improvement," he said.

A desire to increase the amount of time spent online is one of the key factors for introducing unmetered access to the UK. Freeserve remains unfazed. "We are not expecting the introduction of unmetered access to have a great impact. We have been getting 14,000 new subscribers a week since the summer and expect that trend to continue," a spokesman said.

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