World Online goes head to head with Freeserve

The UK's leading ISP Freeserve is in for fresh competition as a new Dutch contender steps up with a stark warning: we're after your subscribers.

World Online comes to the UK next Tuesday with a huge marketing campaign and an aggressive plan to build itself up as Europe's leading ISP. The Dutch player currently has one million users and last week acquired UK backbone telecoms provider Telinco to enhance its battle plan for British eyeballs. Telinco supports the Sun Newspaper's ISP bun.com and totalise.net.

The company is also believed to be courting a major British retail outlet, as yet unknown. The source added that a deal is under way with Peoplesound -- a partner with ZDNet's MP3 Newsroom -- expected to complete today. Peoplesound were unavailable for comment at press time.

World Online's UK CEO Laurence Alexander issued a warning to Freeserve Monday. "Our entry to the UK will be very aggressive. If I was Freeserve, I would be worried," he said. Despite the bravado, there will be no unmetered packages in World Online's initial service, something Alexander blamed on BT. "Until BT gets its act together, I am loathe to do that [offer unmetered]," he said, but he doesn't rule it out for the future. In the first instance, users will pay per minute for the service.

James Eibisch, analyst with research firm IDC believes World Online will give Freeserve a run for its money: "Undoubtedly they will take some of Freeserve's users. A lot of Freeserve users will try out World Online as an additional connection." Eibisch believes that World Online's acquisition of a telecoms company will stand it in good stead to take up the thousands of consumers yet to go online.

Apart from AOL, World Online is one of the few ISPs with presence in many European countries. Eibisch predicts there will be more pan-European ISPs as the market moves towards consolidation. "It is already happening at a global level as the AOL/ Time Warner merger proves. For ISPs it makes them more stable and less vulnerable to country-specific economic changes and individual competitors," he said.

Freeserve, which has its own plans for European expansion, is unfazed by the World Online threat. "Our biggest competitor is AOL and they haven't been able to cope. For a company that hasn't even got a stake in this country, well, its their prerogative to say it but we shall wait and see," a Freeserve spokesman said.

In related news, a company partly owned by the Kingfisher retail group, Libertyserf, last week bought 10 percent of the free-ISP X-Stream with a an eye on further investment and expansion into Europe.

Libertyserf is 45 percent owned by Kingfisher -- owner of Comet, B&Q and Woolworths -- and 45 percent owned by Group Arnault and Europ@Web.

Libertyserf last week also revealed that it plans to expand X-Stream into Holland within the next few weeks.

Will Knight contributed to this report

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