Success of free ISPs spells disaster for paid-for service

Paid-for Internet access subscriptions are likely to collapse from 2.3 million at the end of 1998 to 1.5 million by the year 2003. A report from Fletcher Research (www.fletch. co.uk) says this is despite a doubling in the number of home-based Internet users in the UK over the same period.

The report, Freeing the Future, makes grim reading for Net access companies attempting to cling to a paid-for subscriptions business model.

Fletcher carries out a poll of UK Internet users every six months. Of those users quizzed in the May poll, two-thirds say they do not pay their ISP. The survey also shows that Dixons-owned Freeserve has established a 31 per cent share of the home Internet users market since its launch last September.

Freeserve’s market share is now double that of nearest rival BT ClickFree (14 per cent) and treble that of the largest paid-for subscription service AOL (nine per cent).

According to the report: “The situation is still fluid, as many existing subscribers have not yet dropped their pay accounts. Pay services face a key challenge over the coming months to convince their existing subscribers to maintain the service, let alone recruit more subscribers.”

Fletcher Research director Neil Bradford adds: “Freeserve has built a powerful online brand. We do not expect any other brand to be able to match, let alone overtake, Freeserve’s progress, unless a new business model for delivering access arrives, such as offering free phone calls or free PCs.”

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