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By Tony Hallett, 28 July 1999 00:25

NEWS Subscription-free Internet service providers (ISP) have all but halted the growth of providers charging a flat monthly fee, according to figures from Durlacher Research. Durlacher's report shows that the total market for fee-charging service providers - such as AOL and Demon Internet - is now growing at a paltry 1 per cent annually, compared to 80 per cent a year ago, even though the total number of dial-up users has grown 66 per cent over the past 12 months. The rise of subscription-free ISPs such as X-Stream, News International's CurrantBun.com and stock market debutant, Freeserve is to blame. But while they now account for about 3.9 million users - close to twice the number for subscription-based services - their future is also uncertain. Nick Gibson, Internet analyst at Durlacher, said: "Like subscription-based ISPs, the 'free' ISPs also have to differentiate themselves. They have to raise barriers to exit, as it's so easy for users to move from one provider to another." He added that developments such as high-speed access via cable modems and DSL (digital subscriber line) as well as anticipated changes to interconnection charging structures will continue to shake-up the market over coming years. Durlacher forecasts the number of subscription-free ISPs will grow from 95 now to 200 by the end of 1999. But ironically, it is services such as AOL that have a head start when it comes to attracting advertisers and developing ecommerce. "AOL and CompuServe have the more attractive demographics, and research shows about 75 per cent of AOL users don't venture out to the wider Internet, and would rather stick with AOL when they buy online," Gibson said. UK subscription-free dial-up market Freeserve 1,250,000
X-Stream 270,000
Currant Bun 250,000
breathenet 225,000
Line One 200,000
Other 1,735,000 Total 3,930,000 UK subscription-based dial-up market AOL 600,000
CompuServe 400,000
Demon 175,000
BT Internet 115,000
Global Internet 100,000
Other 644,000 Total 2,034,000