A Year Ago: AltaVista offers free Net service

The cost of unlimited Internet access and email is a window that runs ads constantly and AltaVista is getting into the 'freebie' business.

The company today launched a free dial-up Internet access program that offers unlimited Net service and email, provided users watch a constant stream of ads.

AltaVista is not the first company to come up with the give-away idea, of course. Several PC companies have teamed Internet service provders to offer consumers cheap or free access as part of a bundling deal. Other firms, like NetZero, Surfree.com and Tritium Networks are offering similar ad-based, free ISP services.

AltaVista is partnering with San Francisco-based 1stUp.com to offer the service. The service requires recipients to use a personalised MyAltaVista page as their permanent home page. A small window displaying ads will be run while the user is online. AltaVista said the window "takes up less than five percent of a user's desktop and can be positioned anywhere on the screen at the user's discretion."

The company is also launching a MicroPortal service that remains open as a separate desktop window, displaying links to premier AltaVista services and rotating, customizable content. Users can configure the MicroPortal to show news, sports, financial data, weather, TV listings and local content, AltaVista said. "Historically, AltaVista has had great search. We think we've added great features... the kinds of features that will get people involved," said Bill Keenan, director of distribution at AltaVista. "Having it on our site is a great distribution opportunity for us."

Keenan said AltaVista is interested in expanding the service, as well. The company is working on a Mac version of the software and has also been looking into broadband. "Initially, it starts off as a subsidy model for broadband," he said. "I don't know that we could generate enough revenue to have broadband for free. That's something we're thinking about and pursuing."

As a promotion for the MicroPortal service, AltaVista is giving away $5m (£3.05m) worth of gift certificates for its Shopping.com e-commerce site. The longer users keep the window open, the more chances they have to win gift certificates. NetZero uses the same ad-based model as 1stUp. Surfree recently announced a deal where consumers can reduce their monthly fees depending on how many ads they are willing to view.

Analysts said that while free access may seem like a surefire hit with consumers, some users have apparently decided that it's not worth it. "Consumers are more aware of the value of their personal data," said Joe Laszlo, an analysts at Jupiter Communications in New York. "The fact that [NetZero] hasn't been a rapid success suggests that in U.S. at least consumers are willing to make trade-off of [paying] $15 or $20 a month in exchange for [not giving out their] their personal data."

The business model is slightly different for AltaVista, however. While the company will gain revenue from the ads, it will also be directing viewers to its site. But one industry executive thinks such services are inevitable. "Subscriptions will go to nothing over time," said Tom Jermoluk, CEO of Excite@Home.

Charles Cooper contributed to this story.

What do you think? Tell the Mailroom. And read what others have said.