Monday, May 10, 1999
Alberta free-Net provider sets its sights on Toronto
Carol Howes
Financial Post
CALGARY - Fledgling Cybersurf Corp., the only company in Canada to provide free Internet access, is muscling into the lucrative Toronto market.
Since its debut in Calgary last August and in Edmonton in March, the company has grabbed 75,000 users in the two cities, a figure that impresses even some skeptics of free Internet service.
Cybersurf's president said the company believes, based on its success in Alberta, that it can capture 250,000 subscribers within 90 days of launching in the Toronto market.
Cybersurf executives met with a group of New York investors in Toronto on Friday toward a deal for at least $10-million to help finance a Toronto launch by late September. Then the company would drive into the U.S. market early next year, possibly via an initial public offering on Nasdaq.
Paul Mercia, Cybersurf's president, also said there have been sudden expressions of interest from telephone and cable companies that are courting Cybersurf and want to buy licences for its software. This twist has sent the company back to the negotiating table at the 11th hour to look at broadening its prospective deal with the New Yorkers.
"We're looking at maybe doing a three-way deal," Mr. Mercia said.
Bruce Kasrel, senior analyst with Forrester Research Inc. in Massachusetts, said Cybersurf's move into Toronto will not have a major impact on that crowded market, but if the company follows NetZero Inc.'s example in the United States, then it could make a mark. NetZero, he said, is one of the fastest-growing Net providers south of the border.
Much like Cybersurf, NetZero is free, and Mr. Kasrel said it has attracted one million subscribers since its launch six months ago.
Jim Carroll, author of Surviving the Information Age, said the crowded Internet market is a tough one to crack, even with a free service. He said price wars between service providers have not lured away subscribers from firms that offer good service support in return for a fee. "How can [Cybersurf] compete against the AT&Ts of the world?" he asked.
Cybersurf provides free Internet and e-mail access through its 3web software and makes its money from advertising and e-commerce. When users sign on, they fill out a profile that gives advertisers an opportunity to target their products to specific demographics such as gender, age, and spending patterns.
Cybersurf has signed on advertisers such as Procter & Gamble Co., Molson Cos. Ltd., and Husky Oil Ltd., and is about to announce a contract with IBM.
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