For those of you who think NZRO is a joke, and AOL is god. You might want to read this report.
Analyst: ISPs that charge have flawed business models
By Bloomberg News
Special to CNET News.com
September 30, 1999, 12:35 p.m. PT
NEW YORK--Shares of EarthLink Network, MindSpring Enterprises, and other Internet service providers are overvalued, said Bill Burnham, general partner of venture capital firm Softbank Capital Partners.
Softbank, the venture capital firm's parent, has stakes in more than 100 companies doing business online.
The business model of ISPs that charge customers to link to the Web is flawed because eventually all U.S. ISPs won't charge for access, he said. They will rely on revenue from advertising and e-commerce, Burnham added.
America Online, the biggest ISP, erred when it raised membership rates, because it gives competitors with lower prices, or those that offer free access, an opportunity to steal customers away, Burnham said.
Burnham said he doesn't expect the momentum in the Internet market to slow down anytime soon.
"It's a liquidity-driven bubble, but it will last a decade, because it's being driven by U.S. and global demographics," he said.
Burnham also said he expects to invest $1.25 billion of his current venture capital fund by year's end. He expects to raise as much as $2 billion to start a new fund by the end of March.
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