<font size="3">Freeserve defiant after Dixons chooses AOL</font>
Dixons is to end a five-year-old promotional deal with Freeserve, as ISPs battle for new subscribers

Electrical retailer Dixons Group said on Monday it had abandoned its long-standing distribution agreement with Freeserve in favour of a deal with AOL, confirming weeks of speculation.

The move ends five years of history between Dixons and Freeserve and could have a substantial impact upon the UK's biggest Internet service provider's ability to acquire new customers.

Karen Thomson, chief executive of AOL UK, said in a statement: "We have already established an excellent working relationship with the Dixons team and believe that this agreement represents great value for AOL in terms of subscriber growth and brand awareness."

However, Freeserve said the agreement, under which Dixons promotes Freeserve's dial-up Internet service to customers in its chains such as PC World, had become a hindrance to the ISP's plans to be profitable by next year, because it restricts the ISP from signing up with some other retail partners.

"We will continue to maximise this time with Dixons, but at the same time we will further build on new opportunities for customer acquisition through alternative means," said Freeserve chief executive Eric Abensur in a statement. "With the agreements coming to an end, we will lose all the restrictions placed on us as to which other retailers and partners we can strike deals with."

Full Story: ZDnet UK