Pay as you go? But the Internet is free

Threatening to broadside BT's Wednesday announcement of a pay-as-you-use Internet service, many companies are raising the profile of their free online connections. And some offer free Web space and email in return for using other online services.

There are strings attached, of course, as many of these services attach advertisements to your email and some even to your Web pages. Geocities, perhaps the best known, will give subscribers 11Mb of free Web space and a free email address in return for placing a randomly-selected advertising banner at the top of all opening Web pages.

There are at least five other companies who operate in similar ways, while traditional Internet Service Providers pull their belts in and squeeze a few pounds off their rival's prices. Now the threat extends to corporations who find they have saleable ‘real estate' in the form of unused disk space.

An early example came from Citicorp's Citibank and Virgin Net which teamed to provide Citibank customers with free Internet access for online banking. Citibank has also stated that it will pass on savings in the form of higher interest percentages - savings that come from not having to build high-street branches. Online customers can expect 4.75 per cent interest rates compared to the 3 per cent of ‘offline' customers.

It is the start of a trend that analysts say will not reverse. Jupiter Communications analyst Adam Schoenfeld told newscom, "If you get one very credible provider, then potentially no one could charge." Free Internet access acting as a loss leader was close, he said.