Wanadoo and the raspberry revolution

Freeserve's hippies have had their hair cut and grown up. Clayton Hirst sees if the rebranded company will have a red-letter day in broadband
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The Independent Online

Eric Abensur is colour blind. He has a particular difficulty differentiating between shades of red, which poses a bit of a problem for the chief executive of Wanadoo UK.

The company he runs was known until last Thursday as Freeserve, one of the pioneering internet service providers in the UK. The name - helped by its 1960s-era, flower-power, hippie adverts - quickly became well established and its distinctive blue and orange logo was one of the few UK brands to survive the internet boom and bust.

But Freeserve is no more. Under the ownership of France Telecom, the company is being rebranded Wanadoo and with it comes deep red corporate colours on the home pages of millions of UK internet users.

"We are now a grown-up company. We have a new brand and new colours. I am told that it is raspberry," says Mr Abensur, pointing to the company brochure. "But I don't know. It just looks red to me."

Freeserve's metamorphosis into Wanadoo, helped by a £20m TV, press and billboard campaign, is more than just a rebranding exercise. Freeserve may have established itself as the UK's mass-market internet service provider but Mr Abensur now wants to offer a range of internet, telecoms and television services to his customers.

Remember 1999, when so-called e-entrepreneurs blathered on about the interactive home? Five years on, Mr Abensur plans to turn some of those ideas into reality.

Wanadoo will start with a big push on broadband by persuading its old Freeserve customer base to upgrade to the faster internet connections and by tempting new customers to sign up. By the winter, Mr Abensur hopes to step up another gear: Wanadoo plans to be one of the first companies to allow its customers to make telephone and video calls over their broadband connections, using a technology known as voiceover IP. Another year down the line, and the company hopes to offer its customers on-demand video over the broadband network.

But there's a snag. Before any of this can happen, a radical change at BT is needed. While he my not be seeing red just yet ("I'm not trying to be aggressive with BT"), Mr Abensur is pressing the Government to force the UK's dominant telecoms company to relax its near monopoly in certain markets.

The issue that most vexes Mr Abensur is "local loop unbundling". BT controls the wires from local telephone exchanges to peoples' homes, and unbundling would allow rival telephone companies to use those copper wires for broadband. Unbundling was supposed to happen in early 2000, but the collapse in the telecoms market and a certain amount of heel dragging by BT mean it is still an issue today. Mr Abensur argues that BT is charging too much for access to the local loop. "The price in France, Spain, and the Netherlands is significantly cheaper than it is in the UK. The UK market is still very expensive," he says.

This won't stop Wanadoo offering broadband services. But it does pose a threat to the company's plans for video and internet phone calls.

"I can today offer voiceover IP from the basic connection that BT is offering me. But I won't be able to deliver a high quality of service to the customer. It will be a secondary line," says Mr Abensur. "With local loop unbundling, it would be a primary line and a high quality of service."

Video on demand, he concedes, will be impossible unless BT is forced to slash its local loop prices. "Let's change the regulatory framework in the UK first," he declares.

Mr Abensur has been lobbying the Department of Trade and Industry and the media regulator, Ofcom, to force BT to change its prices. There are now signs that he - along with a dozen other telecoms companies - has been pushing at an open door. Stephen Carter, the chief executive of Ofcom, issued a broadside against BT on Wednesday, warning that it will be forced to cut its local loop prices. The company, he said, was "significantly adrift of European best practice". Ofcom also confirmed that it was looking at the possibility of breaking up BT, creating separate wholesale and retail companies.

All of this is music to Mr Abensur's ears, as it will allow him to launch a fully fledged voiceover IP service later this year. But he won't try to undercut the existing, fixed-line telecoms companies. "If we only target cheap calls then we are not going to make a margin or any significant revenues. The beauty of voiceover IP is you can offer specific services and features."

Mr Abensur won't say exactly what these new services will be: "I will be extremely happy to take you out for a very nice lunch in the summer and give you all the details." But it is understood that Wanadoo will take its lead from France Telecom, which has just launched "Visio" in France. This lets broadband users make video calls and swap computer files, such as digital music and pictures, over the internet.

Mr Abensur concedes that he must first get the Wanadoo name known in the UK before he launches new services like these. Freeserve did this through a promotional campaign with Dixons, the electrical retailer that founded the internet service provider in 1998 and later floated it on the London Stock Exchange. The deal was terminated last September and Wanadoo is understood to be looking for new retail partners. In the meantime, Wanadoo will launch a big promotion through mobile phone stores run by the France Telecom-owned Orange.

With the push on advertising and in-store promotions, Mr Abensur is hoping to ensure that - even though he can't fully appreciate it himself - Wanadoo's raspberry red colours are soon as pervasive as the old Freeserve brand.