AOL to Undercut T-Online for Broadband Services

19 July 2001

An internet access price war is looming in Germany, with news that AOL is planning to introduce a flat rate for broadband ‘digital subscriber line’ services around 20% below that on offer by Deutsche Telekom’s T-Online.

From August, AOL plans to charge DM39.90 per month for the services, undercutting the DM49 charged by T-Online, which currently claims 190,000 flat-rate subscribers. Other ISPs are already mulling similar moves, including Tiscali, Freenet and several local operators.

“Price tests and experiences in other countries show that the AOL charges are at a price which a majority of customers are willing to pay to use the internet as a mass medium,” stated Uwe Heddendorp, chairman of AOL Germany, though he declined to say how many users he hoped to win over.

However, AOL will only allow one thousand consumers per week to access the DSL services at the lower fee. Explaining the decision, Heddendorp blamed Deutsche Telekom’s much-disputed wholesale rate for DSL access – ISPs wishing to sell DSL services are charged DM4,800 per month for every 30 connections. Continued Heddendorp: “We will offer this service to all customers as soon as Deutsche Telekom introduces a fair wholesale flat rate.” Existing flat-rate customers pay DM79 per month.

Currently, would-be subscribe to AOL’s DSL services must first obtain a DSL connection from the German telecoms giant. AOL had hoped to offer DSL connections directly to customers as part of its service package, but an agreement with Deutsche Telekom has yet to be reached.

News source: Handelsblatt (Germany)