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Freeserve attacks AOL over UK customer claims

AOL Time Warner is accused of 'peddling wild and extravagant claims' after announcing that AOL is the UK's leading ISP
Written by Graeme Wearden, Contributor

UK Internet service provider Freeserve has complained to the US Securities and Exchange Commission (SEC) over a recent claim by AOL Time Warner that AOL UK is "the leading ISP" in Britain.

This statement, according to Freeserve, is "wild and misleading" and could cause financial damage to investors with shares in Freeserve's owners.

AOL Time Warner made the statement in a financial press release that was published on 7 January 2002, in which it announced its preliminary results for 2001 and made some forecasts for 2002. Discussing AOL Europe, which had achieved membership growth of 40 percent in 2001, this press release claimed that "in the UK, AOL is the leading ISP with more than 1.5 million members."

Freeserve disputes this claim. According to its latest subscriber figures, which were released on Tuesday, it has a total of 2.244 million members.

"We're bigger than them," insisted a Freeserve spokeswoman. "We've complained to the SEC because this claim could damage our parent companies, who have stock holders in the US." Freeserve is part of French ISP Wanadoo, whose majority shareholder is France Telecom.

John Pluthero, chief executive of Freeserve, suggested in a statement that AOL has a track record of making misleading statements. "Given that AOL has been sanctioned by the ASA about misleading claims made in their advertising and even by the SEC before for improper accounting practices, perhaps it should come as no surprise that they are once again found peddling wild and extravagant claims," Pluthero claimed.

AOL UK was not immediately available for comment.

Freeserve and AOL Time Warner already enjoy a difficult relationship. For several months, Freeserve has been campaigning against the fact that -- as a US company -- AOL doesn't pay VAT to the UK government

According to its latest subscriber figures, Freeserve has been gaining customers at a rate of around 3,000 per day. This follows an increase in its marketing activity -- notably for its unmetered narrowband Internet access product. Earlier this year, the company invested in doubling its network capacity.

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