New Year Brings Price Wars to German ISPs

German Internet service provider MobilCom is starting the New Year by offering a price break to its 6 million dial-up customers.

The company is offering service for 12 cents per minute, to compete against giant telco Deutsche Telekom.

In the first year of liberalization in the German telco market, MobilCom captured a 10 percent market share, racking up more than 20 million talk minutes daily. Company Q3 figures for 1998 showed revenues up fourfold at DEM904 million ($506 million) and profits up fivefold at DEM112 million ($67 million).

Gerhard Schmid’s MobilCom has been running rings around heavyweights, like former monopoly, Deutsche Telekom. The Telekom is the biggest ISP in Europe and third carrier worldwide. Sales for the first half of 1998 were DEM 34.4 billion ($21.5 billion).

Marketing skills have been an effective counter balance to infrastructure ownership. Billing is still via Deutsche Telekom. However, MobilCom offers transparent phone rates: 19 Pfennigs (12 cents) per minute nationwide, 24 hours a day, without the need to be a registered subscriber.

Competition is closing fast though. Major player Mannesmann (consortium includes AT&T and Deutsche Bank) reduced its rates January 1, by up to 54 percent: 18 Pfennigs per minute and 10 outside peak and at weekends for domestic calls, from 9 a.m. to 6 p.m.

Others names are Nikoma, starting the New Year with 12 Pfennigs per minute daytime and 10 post peak in selected big cities, for domestic long distance. Teldafax, Viag Intercom and have attractive offers too.

Not to be outdone, Deutsche Telekom is predicting a 6 Pfennigs per minute rate, although it has not named the date. January daytime minute rates for most of its clients will be 36 Pfennigs, 24 for ISDN.

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