Is Free Internet Access In U.S. Inevitable?

Last week, AltaVista, a popular search engine and Web portal, joined a growing number of companies that have begun offering free Internet access to consumers.

The move is seen by some analysts as an attempt by its parent company Compaq Computer Corp. to challenge America Online by offering free access with content. But other industry experts are quick to point out that AltaVista may simply be cashing in on an inevitable trend. Already companies like NetZero and Freei.Net are signing up subscribers daily for their free Internet access.

Is It Feasible?

The feasibility of free Internet access is based on the premise that closely monitoring users’ surfing habits, and then bouncing back targeted ads at them, will generate enough revenue to more than offset the cost of the free service. AltaVista’s service, called FreeAccess, will put a window with rotating advertisements on the users’ PC. The ad portion, according to AltaVista, will take up less than 5 percent of the screen — which can be positioned anywhere on the desktop.

This move toward free access is already in full bloom in the U.K. It was fueled by Freeserve, an Internet-access service owned by Dixons Group Plc., Britain’s largest electronics and appliance retailer. Earlier this year, it began to offer free Internet access to residents of Britain. As a result — in just three months — Freeserve has skyrocketed into first place with more than 1.4 million users in the U.K.

Both Microsoft and America Online have followed Freeserve’s lead in the U.K. by also offering free Internet access. Earlier this month, Microsoft said that it was also considering offering free Internet access to PC users in the U.S. Some industry experts contend this is currently an idle threat designed to tweak its rival, America Online, as they battle over instant messenger access.

Being Plugged-In Key To Growing E-commerce

But there’s another major reason why some experts say free access time has come: it’s the only way for e-commerce to reach critical mass. Analysts say that television would have never grow as rapidly as it did in the U.S., if access hadn’t been free. I wouldn’t be surprised if, within 12 months, both Microsoft and AOL also begin offering free online service in the U.S. This is not to say that there won’t still be premium services offered for a subscription fee — just like cable TV coexists today with free TV. In order to expand e-commerce by multimillions of more users, they must be added — and added quickly. What better way to accomplish this than by offering them free Internet access?

Specter Of Telephone Taxes

Free access would also serve as a hedge against potential Internet telephone taxes that have been bandied about by some politicians. Although most analysts agree charging Internet users a toll based on how long they stay online would be a serious blow to e-commerce in the U.S., free access would keep the hit from becoming fatal.

While American Online may currently stick it nose up in the air about the prospect of offering some kind of free access to its more than 17 million users, I believe it will soon be forced to — if it wants to survive.

What do you think? Let’s talk about it

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

CRM Buyer Channels