Free ISPs Spread from UK to France

The free-ISP phenomenon that ignited in the UK last
year has spread to France. Five ISPs offering unlimited access at no charge
have appeared since April, with another charging a token euro.

Although it
is unclear how they will earn a profit, several more free ISPs are in the works.

Services and coverage vary widely. All the new providers offer such basics
as 56K Paris access, and POP3 or Web e-mail. Most have newsgroup servers.

Only two — World Online, a subsidiary of the French
company Bouygues and World Online International, and Liberty Surf — have access throughout France. Five have ISDN,
ranging from a basic 64kbps hookup to 256kbps at Freesurf,
an offshoot of a British company.

To configure, three require sending off for a CD; two set up by download,
and one by phone help. World Online requires a credit card number, from
which it collects a monthly euro. It will accept 200,000 one-year
subscriptions, while Lokace Online, an Infonie
project, plans to take on 250,000. The rest state no limits. For now, only
Free.Fr, part of the French telematics group Iliad, and
Liberty Surf, will host home pages.

In France, as in most of Europe, the high cost of access presents the
biggest barrier to surfing. Tacked on to monthly ISP subscriptions from FF55
(US$9.20) to more than FF1,000, local telephone connections cost 7-28
centimes (1.2 to 4.7 US cents) per minute, depending on time of day. Cable
access is scattered and of low-quality. Consequently, free ISPs should catch
on fast.

The question is: how will they make money?

About 70 of the UK’s 300 ISPs are free. A big reason is that British phone
companies pay ISPs a portion of the local call revenue they generate (up to
1.7 US cents per minute).

France Telecom, facing no local-call competition, has avoided this
arrangement, citing an already tight margin and the up-to-50 percent discounts it
gives surfers on ISP connections.

But with French Internet use accounting
for about 20 percent of all call traffic and expected to rise to 50 percent in three
years, the operator is reportedly negotiating a compromise: for standard,
fee-based access, it would not make payments to providers, while users would
continue to get Primaliste Internet discounts. Free ISPs would receive a
modest slice of call revenue, with connections going through a separate
network not covered by Primaliste.

Analysts said it’s unclear what this will mean to ISPs. Meanwhile, free
providers look to advertising and e-commerce to pay the bills. Surfers must
connect via portals festooned with ads targeted with information they
provide when registering.

British company Kingfisher, which owns
Liberty Surf with LVMH, is distributing the offer through Darty, its
electronics/home-appliance chain, which will sell merchandise via the
portal.

VNU, Europe’s top computer publishing group, is using VNUnet Online to promote publications such as NetWork News and SVM Achat.
The group hired Internet Telecom to create its service. That new company is
developing access services for other large French retailer and media
clients.

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