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Is AOL running scared of the free access model?

Other service providers have been happy to adapt and survive, why not AOL?

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Analysis The top man of AOL in the UK has published an open letter calling for wholesale changes to telecomms pricing policy criticising the emergence of subscription free services such as LineOne and FreeServe. Dave Phillips, president and MD of AOL/Compuserve UK, said: "'Free' Internet access services... are fuelled by regulatory kickbacks from high priced, per minute phone charges. "Despite all the hype, the free access business model is not the solution; it is a symptom of the problem of high phone rates, which if left uncorrected, will continue to slow adoption of the Internet and e-commerce in Europe." Phillips is not alone in thinking this. Yesterday, Jupiter Communications published research showing how the current high cost of telecomms charges is stunting Europe's development as a Global Village God in the wired world. Writing for ZDNet UK -- which was ranked as the 56th best site in the UK compared to The Register's, stonking number 13 -- Phillips boasted how no other company had done as much to bring people online as AOL and its dwarfish sidekick, CompuServe. "That's because we offer not just access to the Internet, but because we package the best features of interactive services into an easy-to-use, integrated online environment designed for ordinary consumers and families," he wrote. Fine. If Phillips is so sure that AOL's subscription-based service is the right way to go, why has AOL UK just reduced its monthly fees by more than 30 per cent? Why, if Phillips is confident AOL's approach is right and every one else is wrong, is AOL researching different ways of funding its service? AOL's subscription-base service will not flourish in Europe as it has in the US. The markets are different and it's arrogant to think otherwise. AOL believes it can change telecomms pricing policy in Europe in line with the US just to suit its own business model -- a model that that has done fantastically well in the US. While many people wish it well in its quest, it really is laughable. In effect, it's asking telecomms companies to waive some of their profits just so AOL can continue doing its own thing, the same old way it's been doing it back home. Wake up and smell the coffee, AOL. BT may be making £136 profit a second but it's not likely to cut call charges just so AOL UK can stay in business. Truth is, AOL in the UK is running scared. It's under pressure from other Net companies who are adapting to the ever-changing wired world, companies that aren't afraid to move with the times and try out new things. Phillips wrote: "AOL is working to 'turn off the clock' for online consumers. "We're speaking to governments and regulators across the EU, and we're working on a commercial solution as well. We aim to provide European consumers with the same access to cheap, flat-rate local calls as enjoyed in the US and won’t quit until the Internet becomes the most important and useful medium across Europe -- for everyone -- not just an online elite." ®

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