LA/all, X-Stream speaks Japanese. Well, at least their software does. I wonder how much this new free ISP in Japan paid X-Stream for their software? Jeff
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THE YOMIURI SHIMBUN/DAILY YOMIURI: FREE INTERNET ACCESS COMING TO JAPAN
82% match; The Yomiuri Shimbun/Daily Yomiuri - Japan ; 16-Nov-1999 07:10:55 pm ; 1072 words
Ginko Kobayashi Daily Yomiuri Staff Writer
PC3
Internet service providers have recently begun offering many "free" deals, some in conjunction with computer makers. Some offer a package that includes a desktop computer when you sign up, or you might come across an offer from a provider on one of those compact discs you find in magazines, saying you do not have to pay for your first 100 hours of online time if you sign up with them.
Now, however, companies offering these "free" or "low-priced" deals are in for some competition later this month when the Tokyo unit of a U.S.-based Internet service provider begins offering free-of-charge service without the "if-you-do-this" proviso.
Yoshiaki Sakito, 41, president of livedoor, Inc. says his company can provide everything that the existing major providers do--including e-mail service with popular software such as Outlook Express, an Internet browser and 50 megabytes of server space for setting up a home page--without having to pay a subscription fee.
Livedoor's home page will be in Japanese.
Hoping to initially attract 50,000 subscribers, the firm began accepting registration applications on Oct. 29, and the response, according to Sakito, far exceeded their expectations.
"We received so many calls the day before from people wanting to know exactly what time the next day we were going to start accepting applications," he said, adding that although the service was free, it was "not because it's low-quality."
Sakito said: "First of all, we completely turned around the usual way of doing business by not looking for revenue from subscription fees. From that point, we began thinking about how to do it. We realized we needed to attract subscribers quickly and that our main source of revenue would come from advertising and online shopping."
The first Internet service provider to offer this type of deal, in March 1998, was Britain's X-Stream Network, Inc. Many other companies have now followed suit, such as FreeAccess and Net Zero in the United States, and Freebee and Freeserve in Britain.
Unlike the United States, where local telephone call charges are relatively low and not charged by time increments, telephone fees in Britain are time-based as in Japan. To expand Internet usage, there was great demand for providers who could cut fees as much as possible to offset the cost of the telephone charges.
As a result, X-Stream and others created a new model for Internet business, one that does not rely on subscription fees but draws revenue from online advertisements and shopping, and shares the income with local telecommunications companies. As of July, there were 80 free Internet service providers in Britain--and they were handling 60 percent of all British Net users. Analysts say that by the end of this year there will be 200 free-service providers.
Livedoor, which is set to introduce the British-style provider service in Japan, will use X-Stream-produced connection software, modified for the Japanese market. And, to ensure Web access, livedoor will use dedicated lines provided by MCI Worldcom Japan and a link with Japan Telecom--the latter for the sake of users living outside the Tokyo area.
A U.S. venture-capital firm, New Bridge, has invested 30 million dollars in the livedoor start-up.
Prior to livedoor, in 1996, ASCII Corp. set up a free-of-charge Internet service in Japan, with income expected to come from online shopping and advertisements. But the service lasted only two years because profits were too low. "The time just wasn't ripe," Sakito reflected.
Livedoor's service is coming at a time when people are more price-conscious, and there is mounting pressure both at home and abroad to reduce Internet access fees. What is more, Internet advertising is expanding rapidly.
According to the Multimedia Association of Japan, in fiscal 1996, the market for online advertising was about 1.6 billion yen. This figure rose to 6 billion yen in fiscal 1997, and then nearly doubled the following fiscal year to 11.4 billion yen. The estimate for the current fiscal year is about 20 billion yen.
Sakito is confident that livedoor will lure about 500,000 existing, price-conscious Internet users away from other providers by sometime early next year, and have a million subscribers by the end of 2000.
"We stand out not only for having no connection fees but also for the extensive server space we provide for home pages and X-Stream's portal console technology," Sakito said.
"Using this portal console, we keep profiles on customers to help us target the advertisements. For example, we can carry advertisements catering to different age groups," Sakito said.
Will the emergence of livedoor have a big impact on the nation's provider services?
"It will certainly pressure other providers to lower subscription fees," said Daiwa Institute of Research's Shogo Noguchi, who specializes in Internet business.
Noguchi's outlook remains cautious regarding free provider services. He predicts it will become a niche business, rather than go mainstream.
"Generally speaking, people tend to jump at the chance to get services for nothing, but they also drop those services in a flash, too. Then what happens is the information these providers keep on individuals is no longer useful, and they lose the core of their main source of income--online shopping and revenue-sharing," Noguchi said.
And, he added, there are always preconditions or restrictions involved in subscribing to a free service.
On Nov. 4, ASCII and CSK Network Systems Corp. started a free Internet service for women, called Shes.net, available only during daytime hours--from 6 a.m. to 10 p.m.
Shes.net users act as product monitors. On their home page, the operators clearly state that users have to give their opinions on certain products, and if they do not reply soon enough, they may be dropped from the service.
It is up to each user to decide, Noguchi said, whether the conditions set By a service provider are worth tolerating in exchange for free service, or if it is better to pay a fee and not have to worry about restrictions.
But will such restrictions be around for long? In this fast-paced Internet world it might be possible for a niche-market company to rock the boat of the nation's current 3,000 providers.
"One of our major challenges," Sakito said, "is to convince people that we will provide good service even though we don't charge subscription fees. In this nation, people tend to think that if it's free, the quality of service will be low. But that's not true in our case."
Sakito believes his company's service will get a lot of exposure by word of mouth from its first 50,000 subscribers.
Copyright ¸ Chamber World Network International Limited
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