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"Industry Giants Planning Free Internet Access"

Web giant Yahoo and retailer K-mart are expected to announce a partnership to provide a co-branded free Internet access service. In a deal first reported by the Wall Street Journal, Excite@Home is expected to offer its own free dial-up Internet service in hopes of attracting a larger customer base.

The Yahoo and K-Mart service will be offered through Bluelight.com, a planned Kmart e-commerce site and will be powered by Spinway, a free ISP(Internet Service Provider). Yahoo will become the interface for the co-branded service on Bluelight.com. Excite@Home plans to offer their service using technology provided by 1stUp.com, a CMGI-owned company that also has a deal for free access with AltaVista. Excite@Home already is the largest provider of high-speed Net access over cable networks and recently topped 1 million subscribers. But with tens of millions of Internet users using dial-up technology to access the Web, the company and its advisers have long contemplated a separate dial-up offering.

With their own dial-up service, Excite@Home can maintain a relationship with Net users who can't or don't subscribe to their high-speed service that runs over cable television lines. Because cable television systems require expensive advances and upgrades before they can deliver the Internet access, the service is available in only a few markets.

News of the expected deals come as more and more Internet heavyweights are turning to "brick and mortar" retail chains to add previously untapped consumers to their services because of the trend towards slower Internet growth in recent months. Microsoft recently announced a deal with RadioShack to market its services and America Online is also expected to announce a similar cross-marketing deal with Wal-Mart.

The free ISP's all work in basically the same way and require users to download an interface that sends advertisements to them. By doing so, the company can track user behavior and habits and, with the information, they can sell spots on their software to advertisers looking to target their product to specific population segments.

Free Internet access has made relatively obscure ISPs such as 1stUp.com and NetZero two of the fastest growing ISPs in the industry. NetZero now claims 2 million subscribers, effectively putting it in the No. 2 position behind America Online. By comparison, AT&T WorldNet has about 1.8 million users and EarthLink Network has approximately 1.6 million.

FreeI.Net, another free ISP, crossed the mark for 1 million subscribers. Along with the other leading free services, this puts it squarely in the top 10 ISPs nationwide, slowly moving towards mainstream industry players like Prodigy. Most free service firms have yet to make any profits, but they are becoming creative in finding ways to reach subscribers with tightly targeted advertisements. These targeted ads should boost potential revenue streams and keep these free services viable for the short term and possibly even the long term.

  - by Clayton Crooks

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