Metered call ISPs fail to fit the bill

Companies such as Freeserve and World Online who offer free internet service with metered call charges will struggle to attract customers in a climate of flat rate deals, such as AOL UK, according to a study published by consultancy company Analysys.

Author of the report, Philip Lakelin, senior analyst at Analysys explained why customers preferred flat rate over metered access:

"Heavy to moderate users will want to be in control of their surftime and unmetered, yearly or monthly packages give users a better sense of control."

Speaking to silicon.com, Noah Yaskin from analyst house Jupiter Communications agreed: "Customers are willing to pay for access as a form of insurance of the service they are using. Many users will use free ISPs as a secondary source but a flat rate payment method seems more reliable from a customers point of view."

Lakelin noted the confusion felt by internet users at the moment, which would inevitably drive them towards an unmetered model.

He said: "The increasingly competitive market is very confusing at the moment from a customer's point of view. The ISPs' pricing models are not dissimilar to the mobile phone market, with its many pricing structures - which is a sign of healthy competition."

But even the unmetered access business models have experienced difficulties over the past few months. Many industry analysts questioned whether even unmetered access business models have a long-term future in an already crowded marketplace.

Yaskin summarised the industry view: "Innovative pricing is no longer a guarantee for customer acquisition. Operators are currently trying to compete on offering varieties of options."

Breathe.com, a subscription fee service launched in April, sent out an email to users in which it said it would disconnect them because their level of usage "puts [its] ability to supply the service at risk".

VirginNet and LineOne have put a stop to their unmetered internet access services, claiming technical and commercial hitches are holding back the services.