AOL launches free ISP

America Online (AOL) is to launch a free Internet access service in the UK, running it alongside its subscription-based AOL and CompuServe brands.

AOL said Netscape Online will go live in mid-August, and claimed it will attract Internet enthusiasts not tempted by its £9.99 per month flagship service.

The move is seen as a defensive strategy in the face of competition from subscription-free Internet service providers (ISP) such as Freeserve, and others which actually provide free dial-up access.

However, analysts have doubted whether AOL UK can stop users migrating from its fee-based services to Netscape Online. David Pringle, senior analyst, Yankee Group Europe, said: "There's a distinct danger of them cannibalising existing revenue, with first-time users using AOL as a training ground and then moving to Netscape Online."

A more likely option, said Pringle, was for AOL to charge a fixed monthly fee for an 0800 freephone dial-up service.

An AOL Europe spokeswoman said the services will target separate markets, with the subscription service continuing to prove attractive because of its communities, parental control options and other benefits.

She said AOL has no plans to extend Netscape Online to areas where free Net access has not yet caught on.