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Subject: UKNM: Free Internet Service Providers
From: John Braithwaite
Date: Thu, 23 Sep 1999 10:25:34 +0100

I know that there was a huge debate about 2 months ago concerning Free
ISPs.... I thought that this article made interesting reading (and also
supported my view that the Free ISP business model is a little flawed):

E-commerce Times <http://www.ecommercetimes.com> writes about new report by
Forrester Research which predicts that free Internet access in the U.K and
the rest of Europe will collapse by 2002.

"The report foresees that market and regulatory forces will lower European
interconnect phone fees, decreasing margins dramatically over the next two
years. As a result, user interconnection revenues will drop 30 percent,"
E-commerce Times reports.

"Forrester adds that even in the U.K. - where regulators set up the ISP
interconnection rate - fees will see a deep decline. The EU has already
recommended a minimum of a 10 percent annual drop in UK interconnect fees
over the next three years," E-commerce Times reports.

"According to Forrester, e-commerce fees and advertising revenues will not
take up the slack for lost interconnection income. Moreover, costs will
continue to grow," E-commerce Times reports.

"Additionally, infrastructure and marketing costs are expected to rise as
companies attempt to keep subscribers. Holding on to existing customers will
require significant new investment in these two areas," E-commerce Times

"Forrester believes that the U.K and European ISPs will have to piece
together a new business model that features their greatest asset - access to
a wide consumer base," E-commerce Times reports.

"However, before this can happen, the report says that certain steps must be
taken to develop customer intimacy. While Forrester says that this new model
will work, it also concedes that certain user safeguards will have to be put
in place to keep privacy regulators at bay. In addition, users will have to
be given the right to turn off the tracking of their surfing habits,"
E-commerce Times reports.
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