Home grown ISP Freeserve has announced pre-tax losses of £17.8m representing more than a two-fold increase for the first quarter of the year.

The company’s spiralling losses were revealed against a background of its continued support for unmetered access which is costing the company around £2.50 per month per subscriber.

Many ISPs have questioned the logic of providing a flat rate model while BT maintains its per-minute rate for use of its networks.

AltaVista was forced to abort its own much-hyped unmetered launch last month blaming BT for the fiasco.

Freeserve is claiming more than a quarter of a million users for its flat rate service, with more than two million subscribers overall.

"As we extend the availability of unmetered access we will drive more users to our portals, reduce our churn, increase time online and generate higher e-commerce and advertising revenues," said Freeserve chief executive John Pluthero.

The company claims it will start to make a profit on its unmetered offerings by the beginning of next year, following the introduction of BT’s wholesale pricing scheme for ISPs.