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German Net access price war heats up

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With as many variables in their price structures as a discount holiday package, Germany's flat rate Internet Service Providers (ISP) have begun to compete for Internet users. At the same time, the "free" ISP movement is rapidly gaining subscribers, putting a downward pressure on the cost of Internet access for everyone. But the competition has not reached UK levels. Consumers who want to take advantage of flat rates need to be well armed with information about their Internet usage patterns. Factors such as time of dial-up session, length of session, day of the week, physical location, telephone service provider i.e. carrier pre-select, network type (is it ISDN, DSL, or PSTN) and total number of hours per month all influence the choice of flat rate ISP. At least seven web sites and dozens of articles exist just to help consumers understand various Internet flat rate fee structures. (A sign of rampant liberalisation is the large number of German Web sites which provide telecommunications tariff information, compare charges for mobile services, fixed networks, broadband services, call-by-call providers and so on.) The trend is clear. German consumers and business users are seeing the cost of telecommunications drop from a European high to one of the lowest. Its Swiss and Austrian neighbours look over the border with fee envy. The flat rate Internet access prices are between £31 and £79 per month. There is no extra charge for the phone call to the local POP (point of presence). Most of the flat rate ISP have a one time only "registration" fee of between £47 and £94. Some ISP, such as Surf1, charge a relatively low monthly fee but then charge a steeper sign-up fee. Others, such as Mannesmann Arcor, do not have a sign-up fee but charge steeper monthly fees, plus subscribers have to be pre-select customers of Arcor to get the cheapest rate. In February, Deutsche Telekom's T-Online announced a nation-wide flat rate of £31 to be launched in May. But that tariff is still to be approved by regulators. T-Online says that its flat rate make it more competitive with "free" Internet access providers, that is, those that charge no monthly and no sign-up fees but do charge for telephone calls. Telekom's major competitors, AOL Europe and Germany.net are not competing head to head on flat rates yet. (See table for a ranking of top German ISP by subscribers.) In fact, AOL has not announced any fee changes at all in the past few months, but it is giving away thousands of PCs to schools to drive interest in and subscriber numbers to its service. The third largest ISP, Germany.net, is going for the "free" access model, charging a couple pfennig per minute online to cover per minute telephone network fees it has to pay Deutsche Telekom. There are six (and counting) other flat rate providers: Canalleto, Digital Transfers, Surf1, inWestnet, Internet-Professional, and Medien-Info-Center GmbH. Many of these offer a flat rate but restricted to certain regions of the country. Like the UK and other parts of Europe, a number of free ISP have launched services in the past twelve months. They usually have a low per minute charge, hovering between .01 pence and .02 pence, plus a per session fee of around 1.5 pence. It costs between £13 and £19 per month for about 20 hours (based on 30 sessions), depending on the ISP. A rule of thumb, based on current free Internet tariffs in Germany (in the few hours since I started the research for this article, at least two new tariffs were announced by competing ISPs), is that users who spend more than 35 hours a month online would be wise to look at a flat rate ISP. Otherwise, the free ISP model looks good. Germany's Largest Internet Service Providers Name of ISP Subscribers (in millions) Parent T-Online 4.2 Deutsche Telekom AOL.de 1.5 AOL/Bertelsmann Freenet.de .85 Mobilcom Germany.net .75 Arcor Group

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