After reading through some of the comments after my initial posting
yesterday, I thought I'd better explain how the 'free' Internet service
providers make their money (or at least plan to).

Most of the new(ly) 'free' access providers are large retail outlets, for
example Virgin (music), Tesco (supermarket) and Dixons (electrical).

So, how do they make their money, or how do they intend to make their money?

Firstly, because in the UK we pay for local telephone calls (60 UK pence
buys 60 off-peak minutes), the service providers have arrangements with
British Telecom to split the profits from these calls after a certain
threshold is reached.

Secondly, each ISP has a premium rate helpline for if you are having
problems with your setup or connection. A typical rate is £1 each minute -
10minutes a month on their helpline soon covers the monthly cost of a
subscription!. I've been with one of these free ISP's since last September,
and have never had to make use of their helpline, and I am sure that this is
true for the majority of users. But you have to consider that many of the
new people getting Internet access are new to computers, let alone Internet
access, and may well need to make use of the helplines.
 
Thirdly, advertising is important to these ISP's. The more users you have on
your service, then the more money you can charge advertisers. And yes, when
you first connect to my ISP's home page, it is full of advertising. But it
is nothing like some of the descriptions I read yesterday with windows
popping up here and there saying that you must click or be dis-connected
etc. That just does not happen with these ISP's. Indeed, there is nothing to
stop you changing your startup page to something far away from the ISP's
home page. But of course, advertising permeates the web, it is not unique to
your ISP. 

When I filled in my ISP's sign-up page, I clicked the box asking "not" to
have my details passed to "other companies who can offer services to meet my
needs". I therefore never receive advertising emails. I occasionally receive
(perhaps once a month) a newsletter email from the ISP.

So, why are the ISP's in the UK offering free access? As I mentioned above,
most of them are or are related to retail outlets. They believe that in the
next few years, people are going to use the web more and more to make
purchases, so they believe they need a presence now. The analogy is that
nobody pays just to enter a shop in the high street, you pay for the
products that you buy. The Internet is going that way.

One final note. Most of the 'free' ISP's are the more established (even
respectable?) ISP's that have been around a long time in the UK. Virgin for
one, charged over £10 a month until being forced by the competition to go
free just last month. It comes down to market forces.
 
Regards, 

David
(+44 171 658 5452)


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