Dixons' 'Freetalk' VOIP fails to repeat 'Freeserve' boost to DSG retailing group

At the height of the dot com stock market exuberance seven years ago, Dixons' 'Freeserve' dial-up Internet service transformed the Dixons Store Group (owner of Dixons, PC World and Currys on the high street) into a dot com company overnight. This was despite the fact that 'Freeserve' at the time accounted for only a very small proportion of the retailing group's revenues compared to sales of washing machines, bags for vacuum cleaners and tapes for VCRs.

'Freeserve' was the UK's first large scale dial-up Internet service. Instead of charging a fixed monthly fee, it derived its revenues from a share of the call charges levied by the telecom operators - at the time 1p (US 1.8 cents) per minute. Dixons simply provided the banks of dial-up modems and distributed the connection software in their stores.

DSG sold its Freeserve customer base to France Telecom (which re-branded the business to become Wanadoo and more recently Orange) last week announced that it was shutting down it's 'Freetalk' VOIP service and transferring the customer base to Vonage.

What has changed?

Firstly, unlike the launch of 'Freeserve' in 1997, Dixons did not have a first-mover advantage in its local market. UK consumers who were interested in VOIP calls could already sign-up to a package from several VOIP specialists and from the telcos themselves including BT Communicator.

Secondly, like so many Internet delivered services, VOIP quickly established itself as a commoditised offering. 'Freetalk' required the user's PC to be linked via a broadband connection to the other party's VOIP enabled PC. This severley limited the market size.

Thirdly, and most importantly, recent VOIP adoption patterns show how new technologies have become pervasive and mainstream among consumers. Instead of consumers needing to pop down to their local Currys to pick up an installation disk, in the Participation Age, everything is simply accessible from and distributed via the Network. Apart from transforming high street retailing by providing the consumers with greater price transparency, the Network is impacting consumer's choice, use and satisfaction across all ICT services.

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