INDIGO, the Internet service provider (ISP) owned by Telecom Eireann, will offer a free Internet service package from today, becoming the first of the State's established ISPs to follow telecoms company Ocean and computer manufacturer Gateway into the uncertain waters of the free Net access market.
The free service, called gofree, will be offered alongside Indigo's paid subscription package, called golive. It will offer fewer features than golive and - as with accounts at Oceanfree.net and Gateway.net, the other free Irish services - users must pay normal phone call rates to connect to the service and cannot avail of Telecom Eireann's cheaper 1890-prefix number.
The service was planned three-and-a-half months ago and "is not a knee-jerk reaction to anybody else" in the market, according to Indigo's managing director, Mr Mark Beggs. "Our problem was, we had to get the infrastructure right." However, most industry observers expected that the Republic's established ISPs would be forced to offer free Net access services following the market entry in mid-June of Ocean and Gateway.
Mr Beggs said Indigo was the first Irish ISP to offer free Internet service at its launch in 1995, when the company offered a first year of service for free. "Because the critical mass wasn't there and the business model wasn't there, we dropped it," he said.
Users receive a single email address, five megabytes of server space for their own Web page and can connect only with a regular analogue phone line, not through higher-speed ISDN. They also will pay 58 pence per minute for technical help. In contrast, paying subscribers can receive extra e-mail account user names and can use ISDN, and receive free technical help. Indigo's technical help charge is cheaper than that offered by Ocean and Gateway, which both charge £1 (€1.27) per minute. Mr Beggs said Indigo will also offer a loyalty programme with special offers and prizes.
Modelling its approach on AOL, which increased market share dramatically by giving away free access disks and CDs in shops, the mail and magazines in the US, Indigo has also adopted an aggressive distribution plan for its gofree CDs which will be available at a number of points including Xtravision, Eason, and Smyth's toy stores.
Mr Beggs said Indigo believes it will make the service profitable in the medium to long term through a combination of advertising charges and joint e-commerce ventures.
The Internet market globally is shifting away from a subscription-based revenue stream and towards a model based on acquiring as many subscribers as possible to which services and products can be marketed. While advertising and online retailing are not big revenue generators for ISPs at the moment, analysts expect this to change quickly.
Mr Beggs believes that in the first 10 to 12 weeks of the free service offering, 60 per cent of gofree users will be new Internet users and 40 per cent will be drawn from Indigo's paid subscribers. After that initial period, 20 per cent of subscribers will probably be those switching from golive.
Because of the phone call costs, Mr Beggs expects gofree to appeal to consumers who use the Internet five to eight hours a week. Heavier users, especially daytime Net users, probably will benefit from sticking with a paid account since the 1890 prefix numbers offer calls at 30 per cent savings over regular charges between 8 a.m. and 6 p.m., he said.
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