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To: Sonny McWilliams who wrote (25013)	7/6/1999 5:46:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 41369

FEATURE-Really "free" Internet access still far away By Neal Boudette, European Telecommunications Correspondent FRANKFURT, July 6 (Reuters) - The dramatic rise of "free" Internet services across Europe over the last six months is now raising a critical question: How long will it take before free access becomes completely free? Following the lead of Britain's Freeserve, a host of telephone companies, retailers and banks have launched no- subscription-fee online services of their own -- in Spain, France and Germany as well as in the United Kingdom. But as their numbers increase and newcomers vie to attract and keep users, some are sure to eliminate the cost of "free" access -- the local phone charges users pay for the time they dial into the Internet. "We believe by the end of this year you will see a completely free-to-air provider in the UK," said Nick Jones, an analyst at Jupiter Communications Inc, an Internet market researcher. "There will be some ambitious retailer or network operator that packages some services so that access is free," he said. But getting that first provider to go "free-to-air" may take more time than people expect. The free providers first have to build up enough additional revenue from advertising and electronic commerce to cover the phone charges. RESISTANCE FROM MAJOR SERVICE PROVIDERS There is also a great deal of resistance from some of the major Internet service providers (ISPs). AOL Europe, a venture of America Online Inc <AOL.N> and German media giant Bertelsmann AG <BTGGga.F>, plans to start a free service of its own, but sees it more as a fad than a lasting business model. Deutsche Telekom AG <DTEG.F>, whose T-Online unit is the largest access provider in Europe, is opposed to the free-to-air concept. All the free providers offer cut-rate Internet access in hopes of ringing up other streams of revenue. Freeserve is trying to become a major portal -- a high-traffic Web page that makes money from online advertisements and takes a cut of any e-commerce it brings to e-retailers connected to its site. Telefonica SA <TEF.MC>, the Spanish phone company, wants its Teleline service to boost traffic for its phone network. Dell Computer Corp <DELL.O>, which has launched free services in Britain and Germany and plans to go to France and other countries, believes DellNet will drive sales of its PCs. But with so many providers trying to build up a loyal customer base, some free providers will eventually resort to picking up their customers' phone tabs as part of the deal, said Ian MacDonald, an analyst at Charterhouse Securities Ltd. "It's not inconceivable to imagine some Internet service providers even paying customers to use their service," said McDonald, who follows Freeserve's parent Dixons Group Plc <DXNS.L>, an electronics retailer. Dixons, he added, is more interested in getting revenue from selling products online than getting revenue from phone charges. "They view access like the cost of running a store -- you don't charge people to come in and look around." The rise of free services has been hailed by Internet watchers across Europe because they are helping get more people online. Within months of its September 1998 launch, Freeserve had one million users registered to use its service. Scores of others -- including retail rival Tesco Plc <TSCO.L>, Barclays Bank <BARC.L>, and broadcaster BSkyB<BSY.L> -- have joined the fray. The switch to really free Internet access could put Europe on the way toward narrowing the gap with the United States in the online boom. Many Americans spend 50 hours or more a month surfing and shopping online because they get unlimited access for a flat, monthly fee -- often for a total of about $40 per month. EUROPEAN CHARGES DISCOURAGE HEAVY USE Europe's system of per-minute charges discourages heavy use. In Germany, 30 hours of online time can cost 150 marks ($78.50) or more. And e...