Daiwa EuroTelcoblog No. 68: Tuesday 17th August, 2004 - Web.de enters the fray

German portal Web.de today announced that it is moving into consumer VoIP via a SIP-based offering (http://www3.freephone.web.de/?si=1bdCO.1bX3BJ.1wClVu.k**). What distinguishes this launch is that Web.de is neither a DSL access provider (as is Freenet.de) nor a broadband telephony service provider (like sipgate http://www.sipgate.de). It is a pure portal business, is profitable at the net level, generated cash in the first half, and has 275,000 paying customers signed up to its Web.de Club service (50k net adds in Q2). According to Nielsen//NetRatings data, Web.de was the sixth most popular site on the web in Germany in July, with a unique audience of 7.9m, making it the second most popular locally-generated market site after T-Online itself.

Web.de was among the first European internet players to grasp the potential of voice way back in October 2002 with the launch of the Com.Win product (see PTT Pulse issues 42 and 45 for our coverage), which has progressively added features, including most recently instant messaging. Today's announcement is a logical extension of the progress made to date. We will be interested to see what conversion rate the company can generate from its growing base of paying customers, and conversely what sort of leverage its position in the German internet market gives it in attracting new VoIP customers to be converted to paying Club members. Is this the sort of pressure which might prompt a somewhat more forthright defensive response from Deutsche Telekom, as we have already seen from France Telecom and BT Group in their home markets?