Study: All Internet service free by next christmas

This time next year, Internet service will be free of charge to consumers, according to one scenario developed by the market research firm Datamonitor.

"I admit the idea sounds a little bit out there," Rob Shavell, a Datamonitor analyst, said yesterday. "But the money will be made up in advertising and in e-commerce offerings."

Free Internet access is growing in popularity, with 3.5 million people signed up to firms such as Netzero and Juno Online Services since 1998, said Shavell, the author of a forthcoming report entitled "The Future of the Internet, 2nd Ed."

Low technology costs for Internet service providers (ISPs), improvements in online advertising technology and a flood of new Internet users will combine to encourage free Internet service, he said.

Internet service providers such as America Online, Yahoo and Microsoft's MSN will have to confront the prospect of offering services for free, Shavell said.

Prices charged consumers for Internet access are already coming down in some cases. For example, AOL and its subsidiary, CompuServe, offer a series of rebates for purchases of PCs if customers commit to using the Internet services of the companies. "Having customers committed over time is an advantage to us," said Anne Bentley, a CompuServe spokeswoman. "AOL is a broad company with a lot of efficiencies that brings the cost way down."

Bentley declined to comment on the prospect of offering access for free. However, one analyst said fee-based consumer access to the Internet is not likely to end in the near future.

"The subscription model has been proven in cable, cell phones, landline phones and for publications," said Rob Enderle, an analyst with Giga Information Group in Santa Clara, California.

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