[October 31st, 1998]

See Also   Euro FAQ   The Euro and Your Web Store   Getting Europe Online   Intranet USA - Who Needs Europe?

Two weeks ago I explained why I felt that even the fast growing number of wired personal computers would be insufficient to fuel a boom in business to consumer e-commerce, and how different hardware solutions would be needed to encourage a large mass of consumers to get online.

Although that article was equally applicable to the US and Europe, Europe faces some additional hurdles. Europe has only about half the number of personal computers per head of population that the US has. And the proportion of these that is connected to the Internet is considerably lower because of the high access charges.

These Internet access charges are made up of two distinct portions, the ISP access charge and the metered telephone charges of the telcos.

I have long pondered about how and when these charges would start to fall. For fall they must if Europe is to take full economic advantage of the Internet. But just as I was beginning to despair that these prohibitive charges would ever start to disappear, the first glimmers of light have appeared here in the UK.

The first shot was fired last month by Citibank. They've teamed up with Virgin Net to offer a year's free full-service Internet access to new customers. There is a snag though. Customers have to agree to pay their salary of at least $50,000 into the account or deposit $3300 in their account and prove that their household income is at least $50,000. Whilst these criteria will disqualify many consumers, at least it's a step in the right direction.

The next announcements came from the UK's two largest telcos, Cable and Wireless and British Telecom. Unfortunately they are not introducing the much-hoped for free local calls, but instead are offering a simplified process for connecting to the 'Net. The British Telecom service for example, BT Click Plus, allows users to access the Internet without having to complete any sign-up process or enter in to any long term commitment. The cost of the service - 1.5c per minute - is simply added to the customer's normal monthly or quarterly telephone bill. However no e-mail addresses or free Web space is included.

Click Plus's lack of any registration process is designed to be less intimidating than traditional ISP services and thus encourage the newbie to get online. However the Internet Watch Foundation has already expressed concerns about the illicit uses this anonymity could be put to.

Most recent and most exciting has been the announcement of a completely free nation-wide Internet access service, FreeServe. This service has been launched from a surprising source, Dixons, who are a main street retailer of consumer electrical goods. Not surprisingly the response has been phenomenal with over 60,000 subscribers signing up during the first week. The service is complete with unlimited e-mail addresses and 5MB of Web space. The major downside for this service, which is clearly targeted at new users, is that support telephone calls are charged at a whopping $1.70 per minute. So a careless or naive user could quickly run up higher costs than they would do if they signed up with a traditional ISP with its free support lines.

Whether these new services succeed or not, I am confident that they will accelerate the current trend of decreasing ISP charges and lead to low cost, if not free, Internet access for all.

Free that is, apart from the massive local call charges levied by Europe's telcos. Local calls in the UK are amongst the cheapest in Europe, yet going through my telephone bills for the last year, I calculate that a massive 60% of my call charges were for connecting calls to my ISP. Now I am willing to accept this pain because the Internet is my livelihood. The average consumer however is not and any e-commerce boom in Europe is dependent on the fall of telephone charges.

Will this happen? Well six months ago I would have thought it highly unlikely that we would have free Internet access in the UK by the end of the year, yet it's now here.

These new services though have brought about by the intense competition between the large number of European ISPs. This competition is sadly still lacking even in countries like the UK where the telecomm market has supposedly been deregulated. I therefore expect Europe to be lumbered with prohibitive call charges for some time yet.

Do you agree with me? I'd love to hear your comments.