Free ISPs struggle to survive as public deserts advertising-based model

The rapid deployment of high-speed Internet could sound the death knell for many small ISPs who were hoping their free service would attract eyeballs and advertisers. Several providers are now being forced to charge for their service and the outlook for those that remain isn't good. "Most people would now choose something like a Freenet only when they have no other real sensible choice," Sunny Marche, an assistant professor in the faculty of management at Dalhousie University, tells Network Letter. "There aren't very many employed people that don't have access to the Internet either at work or at home." The availability of more options has whetted the interest for the broad range of Internet products offered by ISPs like Sympatico, MSN and @Home. Previous offerings were too limited, Marche says. "In the early days of free services almost all of the functionality was limited to email and text-based Internet products," he notes. "And of course once people get a taste of gay Paree it's hard to get them back on the farm. So as soon as people get a little taste of high-speed Internet and the imaging technology that goes with it, they don't want to just be stuck with the low end." The executive director of the National Capital Freenet holds a much different opinion. "With the digital divide I think absolutely there's a need for Freenet services," Ian MacEachern states. "We're doing this to connect people." The NCF, one of the oldest and strongest Freenets in the country, has been expanding its service of late. For several years it has offered point-to-point protocol (PPP) in addition to the text-only system. MacEachern thinks a balancing act will continue in the demand for Internet products. "There is still a demand for strictly text access, simply because some people are still using computers with 14.4 modems in them. They bought this computer a while ago. This is what they're going to use and text access is particularly suited to those types of computer," he maintains. "If you're talking about a senior who's got a computer from their son or their daughter, it's an older computer, they're not going to go out and buy a new one. But they want to have email and stuff like that, that's a perfect way for them to do it." The National Capital Freenet relies on donations of money and time. Subscribers are asked to renew their membership each year and if possible, work as a volunteer with NCF. Other Freenets across the country have shifted to a low-cost approach. The network in Edmonton charges an annual fee of $99 for full service or $35 for text only. In Hamilton ON, enhanced service costs $32.10 per year while text costs $10.70. In both cases a $10 start-up fee is assessed. In nearby Brantford, members are charged $20 each month for access to the system. Commercial ISPs that had hoped to lure eyeballs to advertisers have also fallen on hard times. Calgary's Cybersurf and Toronto's Funcows have abandoned their advertising-driven model and are now charging for service. An American web host, Freespeech.org, announced last week that it will discontinue its free service on Oct. 7 but will still maintain its paid service. "What it demonstrates is that there is actually no free lunch," Marche asserts. "I think that's not likely to be successful simply because it's very hard to maintain people's attention in a way that shapes and changes their behavior, which is the whole point of advertising. That's why it doesn't surprise me that they're moving to a subscription model because people's attention for the purposes of advertising is getting very hard to preserve."

Free ISPs struggle to survive as public deserts advertising-based model

News | 09/24/2001 4:00 am EDT

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