LONDON (07/03/2000) - In March, AltaVista Co. and NTL Inc. (NTLI) , a telecommunications company that competes with British Telecom, made headlines in the U.K. when they announced plans to offer flat-rate Internet services to a nation hampered by per-minute charges.
But these two would-be saviors are facing a high demand that threatens their plan to save Britain.
NTL had hoped to give accounts to an unlimited number of customers. But because of the move, NTL has fallen into disfavor with Britain's Advertising Standards Authority, which launched an investigation early last week after receiving an inordinately high number of customer complaints.
"We're formally investigating complaints by people who have applied for free Internet access but have yet to receive a CD [to install the service]," ASA's Chris Reed says of the service, which went live in April. "We're looking into this on the grounds that NTL should be able to prove they made an estimate of the likely demand. The responsibility is on them to convince us that the promotion was well run."
AltaVista coped with the danger of too much interest by limiting the number of customers that could join, saying in March that no more than 500,000 people would be given accounts in the first six months. The company's tentative rollout of its flat-rate service on Friday took heed from NTL. It didn't buy any advertising, didn't make any press announcements and didn't make any mention of the service on the AltaVista U.K. homepage. Confused consumers flooded newsgroups with queries, wondering if the service had been launched at all.
Both companies are keeping a lock on the number of subscribers joining the service because they've seen what can happen when there isn't a cap. The first flat-rate Internet plan, offered by CallNet0800 at the end of 1999, was unable to cope with demand for the service. Thousands of customers were furious as the performance of the service failed to meet current standards. "Whenever the first of these new services come along, you're going to get experienced users to pounce immediately," says Shobhit Kakkar, an ISP analyst with Forrester Research (FORR) in London.
AltaVista has promised to have 90,000 users on the service by the end of July and 250,000 within the next eight weeks. About 19 million British Net users pay for the Net by the minute. AltaVista's plan was to charge a one-time subscription fee and an annual service charge, while NTL would offer completely free access as long as customers agreed to buy telephone services from them.
NTL has terminated all radio, TV and print advertisements pushing the service because the firm can't predict how long customers will wait to receive a CD. It wants to expand the service slowly to avoid the same fate as CallNet0800. "We have to be responsible about how many people we let on to the service in one go," says Liz Nicholson, a spokeswoman for NTL.