Free internet - for 10 hours

By CHRIS BARTON

Free internet access with no strings - that is the promise from Compass Communications, which launches its freenet service today.

Freenet has no joining fee and does not require the introduction of other members, says Compass chief executive Karim Hussona.

Nor will users be bombarded with advertising, as has been the case with free services in Australia and the United States.

But there are a few catches.

"Free" is only for 10 hours a month - after that access costs $1.50 an hour or $19.95 a month flat rate for 300 hours a month.

And the only way to sign up is via the internet.

But until the end of May users can sign up for a totally free "no-strings tryout."

Compass has invested $1 million setting up the service (http://free.net.nz), which will be available in Auckland, Wellington and Christchurch from today - with Hamilton, Tauranga and other centres to follow later.

Mr Hussona says the company aims to fund the free service through commissions from online sales - likening the approach to a shopping mall that offers free car parking to customers who buy something from its stores.

"We've built the car park, built the shopping mall. Now we are putting in the retailers who will subsidise the free access."

Initially, goods for sale will be Compass' own telecommunications and tolls services, but he says negotiations are under way with household-goods retailers.

He believes retailers will want to offer their goods online because of the cost savings possible by selling through the internet.

Freenet is clearly targeting existing rather than new internet users.

Signing up requires logging on to the freenet web site, which Mr Hussona says follows a self-help design to keep administration costs down. The service, designed to support 12,000 users with a user-to-modem ratio of 10:1, is no frills, with help services provided via the web or via telephone using interactive voice response.

"That's pretty cheeky - trying to suck other internet providers' customers away," said Nick Wood, managing director of Ihug, which has about 65,000 customers in New Zealand and charges a flat rate of $40 a month.

But he said other internet providers had tried to lure customers away with cut prices before and it was hard to make free services work.

"There's always going to be a free market. But nothing is really free in this world. They're going to have to get the money from somewhere."

Compass is a New Zealand-owned telecommunications company set up in 1995. It began offering national and toll-call services in 1997, and in 1999 acquired Aix, an Auckland internet provider.

The company employs 50 fulltime staff, has 3500 business customers and expects revenue of $9 million to $10 million this year - up from $6 million a year ago.