Something for nothing and more to come

Anybody want a t-shirt with a vendor logo? I must have a million of 'em. The only thing that makes them interesting now is wearing t-shirts that advertise a long-dead vendor. I wonder if that makes them collectible?

When ISPs start offering free access, you'd expect them to be killed in the rush. Some US-based free-ISPs claim a few million members already, but why haven't they just gone ballistic and consumed the entire user-base of AOL and friends? Maybe it's only a matter of time.

In the UK and Europe, where even local phone calls are often timed and charged by the minute, free-ISP companies can get some revenue by wrangling a slice of that online phone bill out of the telcos. But in the US with free local calls, and here in Oz with 25c or lower, talk-as-long-as-you-like local calls, there's little or nothing for the telcos to kick back to an ISP. So that means the ISP is relying on some other means of getting revenue.

Once you get away from the end-user dial-up accounts, nobody in Internet land charges you by the minute or hour. They all charge by the amount of data that you move around. That's how the ISPs can offer those cheap Internet-phone calls. Doesn't matter where you connect to or how long you stay online, it only matters how much talking you do. And they sure compress the stuffing out of your calls to make sure you don't get too much bandwidth. Still, the quality is about the same as a regular international telephone call used to be about 10 years ago. Awful.

So your free-ISP needs another revenue source but it doesn't need payment on a by-the-minute basis. The most obvious revenue earner is advertising. I wouldn't have thought you could generate enough income by selling banner ads until recently. There now appears to be an acceptance of Web-ads among the advertising fraternity akin to their approach to other media buys. Sure, they still want to know that somebody visits your site to see their ads, but increasingly there's a fear of being left out that's driving online ad sales. Nobody is quite sure how effective it is, but if your competition has banners all over the place, you better not just stand there in case those ads work. So a free-ISP can offer yet another online billboard and in theory charge top price since everyone will want to use a free service. Ergo, kazillions of viewers. Sounds good. Better talk to your investment banker today.

If you want to be an ISP these days you don't need a room full of modems and a few Unix nerds to keep it going. All you need do is buy access from one of the majors and they provide all the technology. You just need an income stream higher than the charges you incur, like any business. But your infrastructure costs are reduced to member tracking and billing. And the most expensive part is the billing. Its not a cheap endeavour to collect lots of stupid little amounts of money from millions of people.

A free-ISP doesn't even have to worry about the hard part of the business. No room full of debt collectors and no high-priced billing and timing software to manage. This is starting to sound good.

There's no practical reason why a free-ISP couldn't be totally automated. Since they don't want your money, just your presence, an account creating bot should be able to handle the whole process. You'd probably want to lock their browser down so they have to visit your homepage on their way to the rest of the Net - gotta make sure they see those ads. But the outlay is not huge and you don't need a suite of offices. Where else can you get a few million customers for sod-all expenditure?

Expect to see a lot of these services being offered by vendors rather than ISP companies. When e-tailers finally get their online shopping acts together, why not give you free access? If you have to walk through their shop on your way to the Internet, maybe you'll buy something. Westfield has made a lot of offline money based on this theory. Expect to see a lot more free-ISPs in the very near future.

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Ian Yates

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