Virgin Net drops Net access charges

Virgin Net MD, David Clarke has sounded the death knell for the fee-based ISP (Internet service provider) as his company announced it will scrap its monthly subscription charge.

From 1 April, Virgin Net's 150,000 customers will no longer have to pay the current £11.99 per month fee for Net access. The offer will be extended to all new users from 1 May.

Clarke predicted the trend towards free Net access for UK users will continue, and lead to a shake-out in the industry. Referring to AOL and Demon Internet, which continue to charge a monthly fee, he said: "I see the industry consolidating on free access, with three or four main players emerging. Those who continue to charge a premium are going to have to justify it by offering added value for money."

The Virgin Net MD admitted that the success of Dixons' Freeserve has changed the face of the industry. "Freeserve has been the pioneer, thanks to its agreement with [UK telco] Energis, whereby a significant amount of call revenues are passed on to the ISP." He said Virgin Net now has a similar agreement with NTL, and expects other ISPs to be renegotiating their telco deals. "If they aren't, they should be," he said.

Clarke also said he will double the money Virgin Net spends on content, which he said is crucial to the ISP's success.

The service will still offer 10MB of Web space for each user, along with five email addresses. But calls to the customer support helpline, which are currently charged at local call rates, will be now be charged at £1 per minute per call, or £5.99 per month for unlimited local rate calls.

The move coincided with Virgin's announcement of a £50m ecommerce drive, which aims to bring online shopping to every corner of Richard Branson's empire by the end of the year.

The plans will see the group sell everything from plane and train tickets to wedding dresses over the Net. A personal finance service is due to go live within a month, with a CD and video 'Megastore' to follow. Clarke said Virgin Net hopes to attract users with special offers at the group's various online stores.