Predicts 98+: Free Internet services if German business model is adopted

At the Predicts 98+ conference in Paris yesterday, Gartner analysts told delegates they should be enjoying cheap or even free Internet access within the next few years if Internet service providers (ISPs) adopt German business models.

Gartner advised European ISPs to emulate the German ISP model which doesn't charge consumers for time online or for an email address. The only charge is the telephone call.

Petra Gartzen, senior analyst at Gartner advised UK ISPs to look at "Germany.net, a German ISP that provides free access for consumers." She explained: "It has built up a large number of consumers on its books and charges businesses for marketing to its userbase. It is a very interesting approach."

Gartner's advice assumes consumers are price sensitive and claims the US model, charging per hour online - which has seen a decline in the UK - will not work in Europe because of telephone costs. "Access revenue is dropping everywhere due to extreme competition and charging for time online is difficult because of telephone charges. Its going to be difficult to make money from consumers this way." said Gartzen.

Canadian ISP, X-Stream is one of the first companies to offer free Internet access to consumers in the UK. The company, launched in March, provides a free Internet service to its customers in a model not entirely different to Gartner's recommendation

A spokesman from X-Stream agreed with Gartner's prediction but did not think customers would appreciate the inevitable flood of junk mail they would receive if their information was given to marketing companies. "We prefer to pass the cost on to our advertisers who are able to target our customers via the web site. I don't think selling companies access to a database is a good idea."

Ben Knox, managing director of UK ISP, Direct Connection questioned whether providers using such models can actually survive in the real world. "Every time I see one of these companies arrive with a great marketing push, there's a blaze of interest and then they go bankrupt." Direct Connection tried an advertising model similar to X-Stream's "it didn't work for us... I don't think there's a viable revenue stream coming from this sort of model".

X-Stream claims to be the fastest growing ISP in the UK with a customer base of just over 10,000 customers.