Freeserve denies it's gone cold on BB

Prefers 'clever' approach

By Tim Richardson, 18th February 2003

Magic Quadrant for Enterprise Backup/Recovery

Freeserve has shelved plans to push broadband and is instead concentrating on making cash from its narrowband customers.

So says a report into the UK's Internet sector by Enders Analysis, which claims that "Freeserve has dropped any emphasis on broadband in favour of narrowband unmetered in its plans for 2003".

It notes that Freeserve racked up 50,000 broadband customers in 2002 - some 25,000 below its own target for the year.

Worse still, this is well down on Freeserve's earlier estimates for broadband. Citing a presentation made by BT Wholesale last summer, Enders Analysis reports that Freeserve was "pencilled in" for 200,000 broadband connections by summer 2003.

It appears unlikely that the ISP will make this figure unless it invests heavily in promoting the service.

The reason Freeserve has scaled back its plans to be a major broadband player appears simple enough - profit. Signing up more flat-rate dial-up users is more likely to push the ISP towards the black.

Says the report: "Increasing unmetered subscribers will be the number one factor in Freeserve reaching profitability in 2004. By contrast, significant broadband investment would have increased losses."

All this comes at a time when there is increased speculation that Freeserve could be put up for sale in a bid to raise cash for its heavily indebted grandparent France Telecom.

A Freeserve spokesperson told The Register: "It's not that we've stopped pushing broadband. On the contrary, we are just looking at more clever ways to market broadband, starting with our own customer base."

As if to make its point, the ISP has today announces details of a free connection and modem offer to its users that runs until the end of March.

However, it's clear that Freeserve is concerned about the costs involved in carving out a future in the broadband marketplace.

Said the spokesperson: "Despite £35 million of marketing spend by BT, we think that the wholesale price needs to fall further to stimulate real demand for broadband. At the retail level we see no benefit in getting into a vicious circle where every player tries to gain share by outspending us on acquisition costs.

"We want to concentrate on the profitability of our existing customer base and the quality of our customer offer. In addition whilst we want to grow our base we won't get drawn into any crazy uneconomic fight with our competitors.

"We have been campaigning for a level playing field in broadband. We have raised a number of legitimate issues about BT's abuse of its position in residential telephony and the impact that is having on their market share as evidenced by their latest set of results," she said. ®