UKNM: Free Internet Service Providers

[John Braithwaite]

I know that there was a huge debate about 2 months ago concerning Free

ISPs.... I thought that this article made interesting reading (and also

supported my view that the Free ISP business model is a little flawed):


E-commerce Times <http://www.ecommercetimes.com> writes about new report by

Forrester Research which predicts that free Internet access in the U.K and

the rest of Europe will collapse by 2002.


"The report foresees that market and regulatory forces will lower European

interconnect phone fees, decreasing margins dramatically over the next two

years. As a result, user interconnection revenues will drop 30 percent,"

E-commerce Times reports.


"Forrester adds that even in the U.K. - where regulators set up the ISP

interconnection rate - fees will see a deep decline. The EU has already

recommended a minimum of a 10 percent annual drop in UK interconnect fees

over the next three years," E-commerce Times reports.


"According to Forrester, e-commerce fees and advertising revenues will not

take up the slack for lost interconnection income. Moreover, costs will

continue to grow," E-commerce Times reports.


"Additionally, infrastructure and marketing costs are expected to rise as

companies attempt to keep subscribers. Holding on to existing customers will

require significant new investment in these two areas," E-commerce Times

reports.


"Forrester believes that the U.K and European ISPs will have to piece

together a new business model that features their greatest asset - access to

a wide consumer base," E-commerce Times reports.


"However, before this can happen, the report says that certain steps must be

taken to develop customer intimacy. While Forrester says that this new model

will work, it also concedes that certain user safeguards will have to be put

in place to keep privacy regulators at bay. In addition, users will have to

be given the right to turn off the tracking of their surfing habits,"

E-commerce Times reports. 

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