The free ISP movement is Australia is accelerating with the announcement
that Free Net will join the ranks
of FreeOnline and FreeISP in offering
Australian users Internet access at no charge.
According to Free Net’s chief executive, Gulam-Abbas Aly, close to AUD$15
million has already been spent on initial development of the service. Free
Net expects to spend a total of AUD$30 million in its first year in order
to achieve a subscriber base of 150,000 by June 2000.
Free Net expects revenue from advertisers, who will have access to the
extensive questionnaires completed by subscribers, and business-targeted
e-commerce sales. According to Credit Suisse First Boston, the value of
each of these subscribers is approximately US$2,600 to $2,800.
Free Online, a rival start-up which debuted in August, only provides free
access to a limited number of sites within its “free zone”. While this
limits usage to only the most popular destinations, the Free Online revenue
model is built on its ability to earn $2 an hour for every “hour of
eyeballs” it directs to affiliated sites.
All three Free ISP contenders in Australia are following the successful
example of FreeServe in the UK. Freeserve, from its initial launch to the
end of April, has managed to generate £2.73 million in advertising and
e-commerce revenues.
However, unlike its Australian counterparts, Freeserve’s business model is
supported by a telecommunications regulatory regime, which allow it to
recover part of the timed local call fees.
The viability of free ISPs has also been called into question by Forrester Research, which says that the model will collapse by 2002. In the research firm’s new report, ‘ISPs Move From Free to Personal’, Forrester suggests that ISPs will not survive unless the providers move to extensive consumer data gathering as a revenue source.
In Australia, the free ISP movement is just beginning. Even new telecommunications provider Dingo Blue is following the discount trend, offering heavily discounted Internet access rates based on a bundled package of local and long distance call plans.
The Free Net service will be available to more than 50,000 people in Sydney and Melbourne from November 1. Access for other capital cities and regional centres will be available by March of next year.
