Freeserve To Offer Mobile Internet Service

Number one UK Internet service provider Freeserve PLC announced plans yesterday to develop mobile Internet services with BT Cellnet, a mobile network owned by British Telecommunications PLC.

As a result of the partnership, Freeserve will offer entertainment, sports, financial content and e-mail via the Internet to mobile phone users.

One of the first offerings — to be available in late January 2000 — will be an e-mail notification service for Freeserve customers who own mobile phones.

Subscribers will also be able to type a short message on their PCs and send it to any mobile phone user.

The services will be upgraded to coincide with the rollout of BT Cellnet’s high-speed Internet access for mobile phones, which is scheduled for deployment during the first half of 2000.

Wall Street Approves

The announcement won the favor of stockholders, as shares of Freeserve (Nasdaq: FREE) skyrocketed $13.75 (US$) to $59.63, for a 30 percent gain.

The company’s July IPO was a direct effort to thwart attempts by America Online to become the dominant online player in Great Britain.

Freeserve’s parent company, Dixons Group, is the UK’s largest electronics retailer with about 950 stores. Freeserve is just one of Dixons Group’s many enterprises, which also include real estate development and appliance services.

Freeserve Sparked Online Service Giveaway

Since its founding last year, Freeserve has been offering free Internet access along with such free online services as Web space, entertainment and news.

These types of freebies enabled Freeserve to easily eclipse both Microsoft and AOL’s subscriber bases — snagging about 1.5 million UK Internet subscribers. Microsoft responded in June by offering its UK subscribers free Internet access.

Many industry observers feel that Microsoft had no choice but to follow suit, since it had lost about a fifth of its 150,000 customers to Freeserve. Soon after, AOL — which is number two with 600,000 UK subscribers — announced that it too would offer free online service.

High Stakes

Some analysts believe that free access is simply the admission price to the UK’s burgeoning e-commerce marketplace. According to Forrester Research, Inc., the buying and selling of Internet goods in the United Kingdom is expected to grow from 160 million pounds ($257 million US$) in 1998 to 8.1 billion pounds ($13 billion U.S.) by 2001.

In addition, the number of UK Internet users is estimated to more than double to 17 million next year, according to the Computer Industry Almanac.

Meanwhile, mobile phones could soon become the Internet platform of choice, as there are already about 20 million mobile telephone users in the UK.

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