Free Access Is Killing Paid-For ISPs, Says Report

by John Lewell
of internetnews.com
[July 27, 1999]

Free access to Internet services has slowed the growth of subscription-based ISPs from 80 percent per year to less than 1 percent, according to the latest Quarterly Internet Report (£195 per year from Durlacher Research).

Next year, says Durlacher—whose new report is sponsored by British Telecom—subscription-based ISPs in the UK may actually be in decline.

By contrast, Durlacher says, there are now over 95 subscription-free ISPs, and the number could rise to as many as 200 by the end of this year. The future for free ISPs is not, however, as secure as these figures might indicate.

"Most subscription-free ISPs, including Freeserve, offer little to differentiate themselves and provide little or no barriers to exit for subscribers," says Durlacher's Nick Gibson.

"As long as users can switch accounts so easily, free ISPs leave themselves vulnerable to churn."

Although many users have multiple Internet accounts, there is a high number of users per account, two factors that have been included by Durlacher in estimating the total number of Internet users in the UK, now said to be 10.5 million—a figure which includes academic and business users.

The Durlacher Quarterly Internet Report also has extensive analysis of Internet penetration in SMEs (Small and Medium-Size Enterprises), with 1,100 small businesses being surveyed. It was found that only one per cent of the UK's SMEs make full use of the Internet's potential, while 15 per cent were classified as "laggards" and 23.4 per cent as "non-users."

—End