Replicating Failure

In the new economy, it's not just the successes that get copied. Failed business models also replicate. In this article, we quote Sébastien Socchard, founder and CEO of World-Net, on the failure of unmetered access in France, and cover the launch of Spain's first unmetered ISP.

by Alex Goldman
Associate Editor, ISP-Planet
[September 9, 2000]

World-Net in France shut down its unlimited access plan for off-peak hours only. The program, started in February, was shut down permanently in September. Sébastien Socchard told france.internet.com that the ISP had planned on users spending about 50 hours per month online, and would have had to bill users up to 5000 FF per month (over US$ 650) for actual unlimited use.

When the interviewer noted that AOL was about to launch an unlimited access plan, Mr. Socchard said he gave AOL two or three months of 5000 FF per-user-per-month losses, and after that, he assumed the program would be terminated. However, he later recanted, and asked that france.internet.com note that he had not suggested that AOL would fail to live up to any promises it had made.

Mr. Socchard said that the actual result of an unlimited access service that is unsustainable is irreparable damage to an ISP's brand name.

He said that World-Net has 1000 unlimited use subscribers, and is asking those subscribers to chose one of several plans. Those that make no choice by September 30th will lose their accounts.

Mr. Socchard added that his ISP is looking to distinguish itself in the future by offering ADSL services in 2001.

Meanwhile, in Spain
Spanish ISP Ola Internet (Hello, Internet) has launched an unlimited monthly service available all day, for 17,000 Pesetas per month (about $88).

The flat fee plan was made possible by a change in the rates the incumbent charges ISPs. The incumbent now charges 7,500 Pesetas per month (almost $40).

Ola Internet claims to have big plans for expansion. It is already moving into the webhost/ASP arena, and hopes to add colocation, VPN services, security services, and other value-added services that will allow it to offer a "complete package" to its clients.

Ola Internet is also interested in expanding into Latin America

Conclusion
Will it work in Spain, even though it failed in France? The flat rate plan can only succeed where government regulation forces the incumbents to charge reasonable fees to ISPs, and where the regulators prevent the incumbent from fighting ISPs with anti-competitive practices, such as a lower quality of service for clients of ISPs.

Sources
Article, in Spanish, from es.internet.com, on Ola Internet: "Ola Internet aúna telefonía, datos e Internet en una tarifa plana" by Miguel Angel Alegre, September 5, 2000. The article can only be reached through the search engine.

Interview with CEO of World-Net, in French, from france.internet.com, World-Net arrête et condamne l'accès illimité, by Francisco Villacampo, September 5, 2000.

—End