10th > March > 2002 Archive

So who's going to buy Energis?

Energis, the ailing alternative telco, has a rack of potential buyers lined, according to the weekend papers. The Sunday Telegraph names Worldcom as a bidder, while the FT reports that distress purchase/ private buyout firms Carlye Group, Kohlberg Kravis &Roberts, Providence Capital and Apax Partners have all tabled bids. The FT also outs Peter Wilkinson, the guy who set up Planet Online - which he sold to Energis - and the founder of Sports Online, a company sold for the ludicrously large sum of £301m to BSkyB in April 2000 - i.e- a couple of months afterthe height of dotcom madness. He's supposed to be locked in with advisors UBS this weekend prepping an offer. Wilkinson is the major force behind InTechnology, an enterprise data storage reseller/distie which is quoted on the stock market. He is on the look-out for cheap data hosting centres, according to the FT, which says he tabled an offer worth 17p a share recently for Telecity. The offer was rejected, the paper reports. Energis' former parent company and still major shareholder, the National Grid, is unwilling to pump any more money into the business, which is not exactly a vote of confidence. But Energis is, in the UK at least, a real business with real customers - as witnessed by the interest from trade and financial bidders. However, it carries a rack of debt on its books, accumulated through an ill-judged £1bn European buying spree (hindsight is not such a wonderful thing). The company has gone into rapid retrenchment mode, last month cutting or selling off the European ops and 400 jobs. This follows 350 job cuts announced last November. But the move is too little, too late to meet its payment schedule to debt bondholders, who are owed £565m in total. They need squaring off, and this is perhaps easier said than done, especially if there are only low-ball bids on the table. Energis, among other things, provides the Web hosting infrastructure for Freeserve, the UK's biggest ISP. This contract is almost certainly in its dying days; fortunately, the company is to provide a similar service for AOL in the UK. ® Related Stories VC firm rumoured stalking Energis Energis culls 400 jobs Energis poised to flog Euro ops
Drew Cullen, 10 Mar 2002

The Net way to wet the baby's head

Our congratulations to Paul Gregg and Mrs. Paul Gregg for the birth of their "2002 Reg twins" Shane and Kirsten at 3.30pm on Friday, March 8. By 5.30pm, Paul, who describes himself as a regular reader of The Register and creator of two ISPs, had registered kirstengregg.com and Shanegregg.com. The websites were live before bedtime. We like your sense of priorities, Paul. ®
Drew Cullen, 10 Mar 2002

Pay for content? Norwegians would…

Norway's media industry is embarking on a mass drive to charge for content on their online sites. The move comes at a time of falling Net advertising revenues in the country, apparently. The media luvvies last year commissioned a microbilling system devised by e-Solutions, an Oslo-based software house, as a way of sidestepping purportedly inequitable revenue splits with telcos, which provide Internet access and hosting. Norwegian punters charge up their micro-billing account with up to NKR1000(c.$US110) and pay for services. And pay they probably will - if they want to carry on surfing. For the media companies are erecting tollgates en masse, according to Alan Cane, the FT's veteran tech hack. "The biggest companies in the Norwegian alliance (representing 80 per cent of Norway's media interests), many of them rivals, have agreed that from a set date - in about four weeks - content that they intend to charge for will be confined to special areas of all their sites that can only be entered by subscription or payment," he writes. "So, surfers unhappy about forking out for information - news headlines, say - from one company will not be able to go to a competitor's site and get the stuff free." Cane has written an interesting article about the Norwegian experiment. It comes very much from the technocratic 'this-costs-money, how-do-we-make-it-pay' school of thought. We think the Norwegian game is unlikely to translate abroad to many countries. For one thing, the European Union does not take kindly to cartels; and for another the US is far too big to get a publishers' concert party off the ground. Besides Net publishing revenues are substantial enough (yes they are) in the US to sustain long term many for-free Net sites. In the UK, if the media industry tried to do a similar thing, and everyone agreed to implement roadblocks at the same time, and this somehow was found legal under British and European competition law, the punters would simply flock to the BBC. Finally, we wonder what Norwegians make of this new mass content tax. Approx. 10,000 of you a month read The Free Register - we welcome your feedback. ® Related Link mThe End of Free - "Chronicling Free to Fee and Beyond" Related stories FT.com, Slashdot, GeoCities flag up charges On Wallace, Gromit and charging for content by PC and mobile phone
Drew Cullen, 10 Mar 2002

Freeserve goes legal in AOL VAT spat

Freeserve is taking HM Customs & Excise to court in an atempt to overturn a loophole in tax law resulting in AOL's exemption from paying VAT in the UK. The ISP, Britain's biggest, filed for a judicial review of customs treatment of AOL - which it estimates saves the American giant £40m a year - on Friday (March 8). The case should be heard in a month or so, according to The Sunday Times, which was awarded the Freeserve scoop. John Pluthero told the paper: "The UK government has been fobbing off Freeserve and BT for over a year on this issue. It's time for the evasion to stop and the litigation to begin." AOL levies no VAT on its services in the UK, thanks to an indulgent -nay, eccentric - 1997 ruling that the company was a content provider operating outside the European Union, and therefore not liable to charge for VAT. If AOL UK had, like Freeserve, been a classified as a telecoms provider within the EU, then it would have had to charge VAT. AOL UK appears to have avoided this classification because its servers live in Virginia. AOL told the Sunday Times that it was not lobbying the government on the matter. Too right, it's had a free ride on VAT for several years - probably a lot longer than it could have dreamed of. However, Freeserve's action may be having an unsettling effect on at least one score: AOL has been notable by its absence for the broadband free-for-all in the last couple of weeks, set in train by cheaper BT wholesale prices. According to Freeserve, AOL is delaying in introducing a broadband option in the UK, because, The Sunday Times says, of "doubts over the legitimacy of its VAT exemption. It would be damaging for it to introduce a product at a price that it could not sustain." ®
Drew Cullen, 10 Mar 2002