America Online is hoping to become Britain’s biggest ISP after reportedly agreeing a major marketing alliance with electronics retailer Dixons Stores Group.

Under the deal, AOL’s dial-up service will be promoted in the 1,100 stores of the Dixons, Currys and PC World chains from February. Said to be worth £100 million ($157.4m; €145.1m), the agreement involves ad campaigns as well as in-store activity, and will see AOL’s broadband offering promoted from February 2005.

The arrangement – rumours of which have been circulating for weeks [WAMN: 05-Aug-03] – replaces a five-year exclusive tie-up between the Dixons group and Freeserve, the internet service provider the retailer part-owns.

Under the existing deal, computers sold in outlets of the three chains come pre-loaded with Freeserve software. The agreement has helped the ISP become Britain’s biggest with a 19% market share.

However, AOL is not far behind on 18%, and will be hopeful the Dixons deal can push it to top spot. It is estimated that 48% of Freeserve’s customers came via Dixons, underlining the importance of the deal.

“We are providing a gateway to the internet for a high proportion of first-time and experienced users,” declared the retailer, “and would expect to hold our share with the AOL partnership.”

Freeserve – a unit of France Télécom’s Wanadoo – is thought to have abandoned talks with the retailer months ago after the price rose too high.

Data sourced from:; additional content by WARC staff