UK consumer electronics giant offers free Internet

LONDON (Reuters) - The biggest British consumer electronics chain Tuesday began offering free Internet service in an effort to boost computer sales and Internet use. The retailer, Dixons Group Plc, launched Freeserve, which will provide unlimited Internet access with no registration or subscription fees or hourly on-line charges.

Customers using the new service will only have to pay the normal charge for a local rate telephone call to get online. The company said this would effectively save people about $250 a year in Internet subscription fees.

Dixons said its strategy is to raise money through advertising on the online service, as well as through direct sales of its products and by taking a split of telecom fees from local telephone service providers.

The product, which is loaded via a CDROM, will be available free of charge from all Dixons stores, which include Dixons, Currys, PC World and The Link.

The stores are the dominant electronics goods retailer in the country, with nearly $5 billion in annual sales, and the Dixon stores face far less direct competition than U.S. electronics chains. But increasingly, Dell Computer Corp and other computer makers are launching online and other direct sales competition.

Internet penetration has been much lower in Britain and Europe than in the United States. Dixons said it had been looking at the Internet market for the past 18 months and had decided many people were put off by the access fees, which average about $20 a month.

``With Freeserve, far more people will be encouraged to try out the Internet,'' Dixons said in a statement.

The online service will offer e-mail, Lycos and Scoot search facilities and UK news, sport, weather reports supplied by the Press Association, the British news agency.

Energis, one of the UK's largest national telecoms companies, and its Planet Online subsidiary, will supply the network and connections. Dixons said Energis already carried more than 40 percent of the UK's national Internet traffic and Planet Online had more than 15,000 Web sites.

Dixons' chief executive John Clare would not reveal the development costs, but he told a news conference they were not significant.

He said Dixons hoped to make money out of it over time and profitability would depend on the number of customers who signed up and the speed with which they did so.

The chief executive said unlike other Internet service providers Dixons would not face distribution or billing costs and there were potential revenue benefits from advertising, telecom payments and electronic commerce.

Clare would not go into detail on the terms of the agreement between Energis, Planet Online and Dixons, saying the arrangements were commercially sensitive.

There is also a helpline service for users, but this is not free -- calls will be charged at the premium rate of one pound per minute.

Britain's sales of consumer products over the Internet are currently tiny, but Dixons expects them to grow, particularly if free access enticed more people to use the Internet. Dixons said the UK's consumer online population was estimated at around five percent or 1.16 million.

(Reuters/Wired)