Toll-free offer will net more online shoppers

Call charges are deterring people from exploring the Internet, which is bad news for companies pushing online selling, argues Adam Daum

Subscription-free Internet access has boosted the number of people online, but call charges still deter users from taking time to explore the Internet. This has a detrimental effect on e-commerce.

By contrast, toll-free services will attract intensive users, who are already the most active online buyers, and encourage others to spend more time online.

BT’s recent change in the way it charges Internet service providers for Internet calls may be a step forward, but initial reaction has not been positive and the widespread introduction of unmetered access still seems some way off.

But any move towards less time-constrained Internet use in the UK is welcome. It takes time to develop the necessary skills to use the Internet fully. Any novice can click on a hyperlink, but extracting real value requires greater proficiency.

The constraining effect of metered access on Internet use is not a specifically European problem – the same effect was seen in the US. After a period of rapid growth, home Internet access flattened in 1996 at 11 per cent of households. It was only when AOL introduced a flat-rate subscription fee – local calls in the US are free – in September of that year that growth picked up again. The only way to encourage exploratory Internet use is to offer unmetered telephony, or more accurately, toll-free Internet access.

Competition between subscription-free and toll-free ISPs is likely to cause a split in the market. Light users will be attracted to the subscription-free services, as they will only have to pay for what they use. However, heavy users – and people who would like to be heavy users – are likely to migrate to toll-free services, because they offer better value and predictable costs.

Consumer research by the GartnerGroup indicates that the most experienced and intensive Internet users are also the most active online buyers. Therefore, toll-free services are likely to attract the most valuable e-commerce customers.

This must have implications for how brand-owners decide where best to place online ads. Online media planners will be forced to assess the quality, not just the quantity, of Internet users visiting a particular site. And segmenting out these most active online buyers may well be the key to beating the crowd in developing e-commerce services.

Adam Daum is a senior analyst in GartnerGroup’s European e-bus- iness group (www.gartner.com)

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