Bernard, a look at some Internet business modeling issues on the other side of the pond. From the NY Times:
nytimes.com
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"New Models Rein In Cost of Internet Access"
By Bruno Giussani
A brief excerpt follows:
GENEVA -- How long will it take before Internet access in Europe becomes free?
As recently as last fall the question would have been discarded as just more Internet hyperbole.
But across the continent Internet service providers are now exploring new business models that don't rely on charging users monthly fees. Instead, they cover costs by sharing the local-call revenues with the telecom operators.
Still, totally free access faces a major hurdle. Unlike in the United States, in Europe local phone calls, including all Internet dial-up calls, are generally charged by the minute and are prohibitively expensive, up to $4 an hour. Add the usual Internet access fee of $15 to $30, and the monthly bill for an average user (five hours a week) can top $100 or more.
In public opinion polls, cost is the most often cited barrier to the spread of the Internet in Europe. In several ountries, including France, Switzerland,Belgium, the Czech Republic, Germany, Italy and Britain, groups of users like the Association of Malcontent Internauts have staged a series of strikes and other initiatives asking for unmetered, flat-fee local phone service to bring down the cost of using the Internet. They have had limited success.
In a recent study by Jupiter Communications in Germany, France and Britain, consumer were asked if they were likely to go online: 11 percent answered "yes," yet this figure increased nearly four-fold, to 40 percent, if local phone charges were to be dropped. The survey also found the same four-fold increase in inclination to go online in the absence of Internet access charges.
While most Americans enjoy free local calls, Eurpean callers may have to wait a while. "In Europe, generalized free ISP services are closer to reality than free phone calls," said Phil Dwyer, the director of Jupiter's European operations.
For the last five months, everybody has been looking at Britain for clues.
At the end of September, Dixons, the country's largest computer and consumer electronic retailer with 900 stores and sales in the $4 billion, launched a free ISP. Called Freeserve, the service has since signed up an astonishing 1.35 million registered users (an average 65,000 a week), one million of whom are actively using the service, almost as many as America Online, so far the biggest British provider.
"An estimated 42 percent of the first half-million users were new to the Internet," Freeserve's spokesperson, Justine Moon, said in an interview.
In a few months the Freeserve success "has irrevocably changed the landscape of new media" in Britain, Dwyer said. And all over Europe: the model has been duplicated by dozens of companies like Tesco and Virgin of Britain; Tiscali of Italy; Econophone, Sunrise and Span of Switzerland, and many others in the Netherlands, Sweden, France and Germany, sharply boosting Internet usage across the continent.
Free Internet access paid for by advertising has been offered in the past, mainly in the United States by companies like Tritium and CyberFreeway (both went under), and recently by NetZero.
Unlike their American counterparts however, which can only rely on (hesitant) advertising revenues and electronic commerce commissions to pay for connectivity, Freeserve and most of the other European services get their primary revenue by sharing the local-access charges with the telecom operator.
The scheme is simple. Freeserve has teamed up with Energis, a British operator of voice and data networks. When a call is placed to one of Freeserve's access points on the Energis network, the user is charged the local call fee by his operator (usually British Telecom), which then pays part of that sum to Energis for putting through, or terminating, the call.
Every phone call generates two payments: the "origination payment," which goes to the operator where the call started -- in most cases to the old national monopolies that still control the "local loop" -- and the "termination payment," which goes to the network where the call ends. |
