From the Archive: Freeserve
‘From the Archive’ is the regular column that revisits some of the more interesting retail stories covered over the past 30 years by Glynn Davis for a variety of publications.
This period covers many seismic structural changes in the industry including the emergence of the internet. Alongside the actual stories Glynn will be adding commentary around each of the pieces that will seek to put the articles into context with today’s landscape.
Subscribe to TRBFrom Sunday Business (20 May 2001)
Accessing the internet today requires zero effort but back in the late-1990s it was a more clunky experience that required you to dial in from a landline via an ISP (Internet Service Provider). All and sundry including telecom companies, tech firms, and retailers jumped on the bandwagon to launch their own ISPs as this gave them access to these new online customers/shoppers.
All these businesses charged a monthly subscription fee – on top of the cost of the phone calls – until Freeserve came along and totally changed the game. It was launched by Dixons and proved revolutionary in the market because it gave free access to the internet for all in the UK.
My lengthy piece for Sunday Business in mid-2001 told the inside story of how Freeserve was created. It revealed that it was not the big-wigs at Dixons including Freeserve CEO John Pluthero who really deserved the credit for the invention but was instead a lowly store manager at the retailer, Ajaz Ahmed, and a publicity-shy Yorkshire businessman, Peter Wilkinson.
The story came about when I bumped into Ahmed in Leeds when writing a feature about the city and he then introduced me to Wilkinson whose office in Harrogate I went on to visit some time afterwards. The whole interesting story was revealed.
Ahmed had badgered Dixons for some time about launching an ISP as it would sit especially well with the retailer’s PC World business. But the senior management showed little interest. Among the sceptics were chairman Sir Stanley Kalms, CEO John Clare and MD of PC World Terry Duddy.
Ahmed left the company disillusioned and it was only when he met Wilkinson at a Leeds United football match that the project was resurrected. The real kicker was the calculation that Wilkinson made on the back of a napkin on a GNER train heading to London that showed a deal could be cut with BT and the payments it made to local networks for call traffic. This would enable it to offer the service free to consumers. It was a delicate calculation that could have left him seriously out of pocket.
In comparison, all Dixons had to do was distribute the CD-ROMs in-store promoting the service and providing log-in details to the ISP. The creation named Freeserve was a massive success when launched on 22 September 1998. The 250 million minutes of online time Wilkinson predicted would be used in the first six months of operation was quickly surpassed and it was hitting 100 million minutes a week within only two months.
It quickly became the most dialled number in the UK and when I visited Mark Danby, who had been brought in to help run Freeserve, at Dixons’ HQ in Hemel Hempstead he indicated the flow of calls were being redirected around various BT exchanges around the UK such were the volumes.
Four million people became regular users of the service and its value hit £10 billion before drifting to £6 billion when a bid emerged but then fell away. Freeserve was to float in March 1999 at a still decent £1.6 billion valuation before it was subsequently taken private by Telco Wanadoo. Dixons ultimately enjoyed a tremendous return on its original £240,000 investment.
Wilkinson earned a very healthy sum from the calculations he’d made that gave him a cut of the phone call revenue from BT – that he described to me at the time as akin to “football star” monthly earnings. It was Ahmed who sadly earned scant reward for his efforts but there is no doubt that he played a pivotal role in getting millions of UK consumers online for the first time.
