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Free ISP Service Market Said to Be Reviving

As the cost of bandwidth falls, the market for free Internet access services will more than triple by the year 2005, says a new study from market research and consulting firm The Strategis Group.

Today, more than 12 million users access the Internet via a free, advertising-supported service, the study says.

That number is expected to grow to 37 million by 2005 and will represent about 23 percent of all residential Internet users, Strategis Group says.

"The falling cost of network bandwidth and the development of sophisticated tools for personalizing and delivering content to targeted users has led to a revival of free Internet access," said Ty Cottrill, senior analyst and author of the new study, "Residential Internet Access: The Free ISP Model."

"Ad-supported Internet access providers have made an auspicious debut in the (ISP) industry, attracting subscribers, investment capital and attention," Cottrill said.

"Free ISPs now must focus their efforts on demonstrating that the millions of subscribers they serve can be translated into a profitable, long-term business. The market appears receptive but free ISPs must overcome many operational and financial obstacles to achieve longevity."

While mass-market retailers (such as Kmart's BlueLight.com) have been among the first to offer Internet access as part of their overall customer service strategies, such companies as financial institutions, automobile manufacturers and fast-food restaurants, are likely candidates to offer such service to customers and employees, the study found.

Organizations such as alumni groups and political parties also are strong candidates for expansion of the free ISP model, Cottrill said.

The Strategis Group publishes industry research reports, provides customized consulting services and supplies information solutions to the cable TV, satellite, Internet, competitive telephony, broadband and wireless communications industries.