It’s not just in the UK that flat-rate Internet access is swifty proving a disaster. A wave of failures in continental Europe's fledgling flat-rate ISP market is just the beginning. Analysts expect a flood of mergers and bankruptcies in coming months, as a dramatic shakeout hits the European market for unmetered dial-up Internet access.
"No surprise," said Lars Godell, European telecoms analyst at Forrester Research BV in Amsterdam. "We are talking about a business model that already in '99 was pointing heavily in the red in terms of huge losses." He predicted that the flat-rate ISP business model will be dead in Europe within two years.
Several German companies are calling it quits in the hotly-contested flat-rate market. Düsseldorf-based DUSnet announced this week the end of its FLATcity tariff, which was introduced on August 18. In a statement, the company said the pricing plan, with a start-up fee of 69 marks (around £21) and a monthly flat fee of 69 marks, is proving economically unfeasible.
Last week, Bitburg-based Surf1 announced the opening of bankruptcy proceedings. In a statement, the company said its flat-rate model had resulted in "immense losses," as 80 per cent of customers were surfing more than the calculated break-even point.
And Versatel, in Dortmund, has stopped taking new subscribers for its unlimited Sonne service, which costs 79 marks (around £25) a month. Previously, the company said in an open letter to customers that the average user surfed an hour a day; that figure has shot up by three- or fourfold since introduction of the new flat-rate tariff.