German ISP to introduce flat fee
T-Online, Europe's largest Internet service provider, announces that beginning in May it will offer a flat Web access fee, including all phone charges, to its 4.5 million German customers.
The exact price hasn't been disclosed, but according to T-Online spokesman Stephan Broszio, it will cost less than 100 Deutsche marks ($50) a month.
Contrary to access in the United States, where local phone calls are free, Internet access and local phone calls in Europe are charged by the minute. According to several studies, this has prevented widespread Net usage. Although some flat pricing plans have appeared in recent months, T-Online is the first major ISP in Germany to adopt the idea of unlimited Net usage at a fixed price.
But AOL Europe, T-Online's main competitor, fears that the company may be getting preferential treatment by its corporate parent, Deutsche Telekom, which enjoys a virtual monopoly on local calls.
All German ISPs must use Deutsche Telekom's network to connect with consumers, paying fixed interconnection rates charged by the minute.
"All providers should pay the same price for the last mile to the consumer," said AOL Europe CEO Andreas Schmidt. "If T-Online can afford to offer a flat Internet access fee, we all need the same conditions in order to compete on the same level."
But Broszio said T-Online won't get any discounts for interconnection charges.
"We'll pay the same prices for access to customers as everybody else," he said. "We will just be offering cheaper Internet access than our competitors, and we're certain that this will be profitable for us in the long run."
AOL Europe has launched an ad campaign in German newspapers, urging the government and Chancellor Gerhard Schroder to promote Internet usage and ensure competition on equal terms. Schroder, who opened the CeBit trade fair in Hannover, Germany yesterday, didn't comment on the online giant's efforts during a visit to its exhibit area.
Although AOL Europe is not planning to offer a flat pricing plan in the near future, it has denounced T-Online's offer as too costly.
"That's not a flat rate; it's a fat rate. Surveys have shown that German Internet users would deem 30 or 40 DM ($15 or $20) as a reasonable monthly access fee," Schmidt said. "But as long as Deutsche Telekom will charge the last mile by the minute, prices will remain high."