RE: UKNM: Freeserve hits one million...

[Ross Sleight]

>Which of the major paid-for ISPs launches a challenge to Freeserve?


>Methinks Easynet but bets please...


>My money is on BT.  With their acquisitive streak starting to be realised I

>reckon some of that money might be spent on holding up some existing market

>share i.e. free access, getting rid of the extra penny per minute.  It

>makes sense for them.  If anyone can afford it they can, and if anyone can

>stay in it long term that's them as well.


To my knowledge, (and this is in no way gospel so I cede to more informed

sources in this area) BT *won't* and/or *can't* enter this free access

market.


*Won't*, because they believe that Free access without free support is not

the way forward in the marketplace to serve new users.  Click to them is a

starter package for infrequent users before they are sold up to a package

like BT Internet. If the average Internet user spends circa 20 hours online,

at an additional 1p per minute to phone call, then this comes to £12....time

to switch methinks


*Can't* because Oftel are looking over them, and I don't think its a

competitive scenario when you allow the monopoly telecoms market to offer

access for free - how can this foster healthy competition in the telecoms

marketplace?  And what happens when interconnect revenues are renegotiated

between BT and other telecoms providers (under the watchful eye of Oftel) to

lower the interconnection rate value for the rival Telecoms companies?

Surely BT will be/have been complaining to Oftel that they are being

unfairly discriminated against in this area?


And BT are probably concerning themselves with opening up the broadband to

the house, which if these ADSL trials are successful, could mean the end of

the FreeServe's in the next five years or so unless they can provide the

same service through their telecoms partners ("Now sir, what type of access

would you like...28.8kbps for free or 2mbps for £30 per month...." ) 


IMHO the winners in this war are those that own either the local loop or a

trunk system - so Cable companies, and the Energis/UUnet's of this world.

If an ISP does not have Telecom Provider license status, then I think they

will be in deep trouble as a service provider in attempting to provide a

free service. Thus most of the rebadging exercises (Barclays, Mirror, Sun,

Wh Smiths, my local grocer etc.) will utilise the big trunk owners in a

rebadging exercise, thus C&W and Energis will be the ultimate winners

(traffic volume up, and even if interconnect revenues go down, greater usage

equals greater profit in the end.) BTW, to my knowledge, both Demon and

Easynet have the status of Telecom License (Demon before it was bought out

as well)....anyone know of any others?  (I suspect Virgin do have through

their NTL partnership)


Start train of thought.


I think that Steve Bowbrick mentioned on this list some months ago with

regard to the ISP marketplace developments post Freeserve that nothing was

really free, and I agree with him wholeheartedly in this matter.  FreeServe

do look to Ad revenue and e-commerce revenue as part of their revenue

generators, but my question is how much ad space can/will they sell from

available inventory? Also, US research indicates that only 30% of E-commerce

revenues come from portal affiliations, the rest from other affiliate

schemes and direct to store....so how much of the e-commerce revenue will

FreeServe take (and remember this is a % of a %...see those margins fall).

How realistic will it be if we have 5 or 10 providers trying to emulate this

plan?  And how will this affect the rest of the Net....just think - there's

not enough revenue to go round at the moment, never mind about in the

future, so what happens to when it is even more concentrated in portals? 


And realistically, will any other Free ISP see the type of growth that

FreeServe has seen?  After all, of 875k users, with c 40% of them being new

online equates to 350,000 new users to the Internet (and these users are all

from the home for the sake of this hypothesis)....and total Internet growth

of new users is well on 1.5 - 2 million every six months (and lets say c35%

of these users are new home users so that's 525,000-700,000 new home users

every six months)....thus is FreeServe growing the marketplace for Internet

usage or is it taking a healthy chunk out of total internet growth.  After

all is there a finite growth potential month on month for new Internet

users, or switchers? - well yes!


Free Access obviously reduces a barrier to Internet usage and take-up.  But

its not the be all and end all of the Internet weaving itself into the

information structure (or hell, even the entertainment structure) of a

user's life -  there are far more barriers to entry and barriers to raising

individual user's value and time spent online.  Its these latter issue I'd

love to spend some time discussing......


End train of thought.



Ross 

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