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AOL demands flat fees for Germany

Is there no start to this company's political skills?

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After a dry run in Britain, AOL Europe is taking its political lobbying skills to Germany. The world's biggest ISP wants the German government and public telco Deutsche Telekom to reduce Internet call charges by up to 50 per cent. This would stimulate the German economy by 0.5 per cent and create up to 400,000 jobs, AOL claims. It bases the forecasts on a (self-commissioned) survey on the impacts of flat-fee charges on the country. For once this is not Anglo-Saxon preaching: AOL Europe's chief executive Andreas Schmidt is German, even if he swallows the American capitalist message hook, line and sinker. "The Internet can bestow a second miracle on Germany and in the short term lead to a radical reduction in unemployment," he told Reuters. "The Internet is the job machine of the future." German off-peak connection prices are the second highest in nine major Europe markets, the AOL report found. The company calls on regulators to force Deutsche Telecom to reduce its interconnect charges. It has room to introduce a "40-mark flat-rate fee while boosting average income 30 per cent", AOL Europe spokesman Frank Sarfeld told Reuters. "We're not asking Deutsche Telekom to give away the flat rate for free. They could even make money," he said. Lower charges would mean hugely expanded call usage, according to AOL, which cites its experience in the US, where usage trebled, after it introduced flat fees. Turn that meter off AOL Europe last year threw its weight behind CUT, the UK group which lobbies for unmetered telephone charges. Already in the UK, ISPs are trialling flat rate and free services -- and most of are getting swamped by the huge demand. It is just a matter of time when -- not if -- a monster ISP like AOL goes wholly down the unmetered route (currently it's fee-paying operation offers 1p per minute service in the UK). An unmetered UK telephone networks suits AOL very well. Its fee-based business model is designed for such an environment, while free ISPs living off metered phone charges (such as Freeserve) are a huge irritation, and impediment, to making money. In Germany, Europe's richest and most populous market, there is even more to play for: AOL Europe, a joint venture between AOL and Bertelsmann, has 1.6 million users in Germany, but it ranks far behind Deutsche Telekom-owned T-Online, Europe's biggest indigenous ISP, with more than 3 million users. However, it will take some time for AOL's call for unmetered calls in Germany to take wing: Deutsche Telekom is currently preparing a third wave of privatisation, and the German government is -- so Reuters says -- unlikely to do anything to undermine confidence in advance of the share offering. ®

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