±±¾©Èü³µpk10

Dixons has developed Freeserve in partnership with The Press

Association, Lycos, Planet Online and Energis, and it is the latter’s

involvement which makes the free service possible.

Despite cynical suggestions that Dixons intends to make the service pay

from the Å“1 a minute rate charged for calls to its help desk, it is

actually the time users spend online which will be crucial. Dixons is

taking a cut of the local-rate telephone calls which people make to be

online.

If someone calls from a BT phone to another BT number, BT keeps all the

money. If, however, BT has to pass on the call to another carrier, the

revenue from the call, even if it is still a local one, is shared between

the two carriers. With the explosive growth in internet telephone traffic,

it benefits telephone companies to pay ISPs for the privilege of

delivering the calls from their subscribers - usually a percentage of the

’interconnect rate’ the telco receives from whichever other phone company

originates the local call. The key thing to remember with Dixons’

Freeserve is that Planet, the ISP running the ’virtual ISP’ service on

Dixons’ behalf, is owned by telecoms company Energis.

According to one analysis, Dixons is likely to be getting around 0.11p a

minute for every call that accesses the service. Assuming an average of 20

hours’ use a month by 100,000 users, that would translate into Å“1.5m a

year. Further revenue streams will, in time, come from advertising and

e-commerce.

Dixons’ main means of distribution will be its network for stores, so

costs here will be a fraction of those for conventional ISPs. According to

researcher Inteco, around 20 per cent of new PCs in the UK are sold

through Dixons Group outlets - a large pool of potential customers for

Freeserve.

”Dixons might well be the lowest-cost ISP in the UK,” says an analysis

from PriceWaterhouseCoopers. And as for the Å“1 a minute calls to the help

desk, if the service starts to turn a profit from those, it is probably

not long for this world anyway.

One drawback is Dixons dependence on the current telecoms regulatory

regime, and the pricing policies of the originating telcos, in other

words, mainly BT.

As David Furniss, sales and marketing director of Demon Internet, points

out: ”It’s only one BT price change away from disaster. Free local calls

at weekends would kill it.”