Freenet to stay free - for now

By MICHAEL FOREMAN

Compass Communications managing director Karim Hussona has denied industry rumours that free internet service provider freenet will follow i4free's switch to a paid for model.

While "some changes" would be announced this week, Mr Hussona confirmed that freenet would continue to offer a free service.

"We haven't been affected by the same circumstances as those that I believe are affecting i4free. We are still continuing to receive interconnection revenue from Clear."

While i4free's revenue sharing agreement with Clear Communications expired on January 1, Mr Hussona said freenet's agreement "goes much further forward than that," but he refused to say when it would expire.

Since i4free announced on January 5 that it would downgrade its free service in favour of a $14.95 per month plan, some of its 145,000 users appear to be moving elsewhere.

Last week Compass financial controller Paul Carter reported "quite a big increase in [new customer] activity" in the 48 hours following i4free's announcement. Yesterday Mr Hussona said freenet was signing up between 500 and 600 users a day.

According to Mr Carter, freenet's registered users numbered around 90,000 but only just over 50,000 were active. If the number of active users rose above 55,000, freenet would begin to "cull" its dormant accounts.

Meanwhile several paid-for ISPs are predicting the imminent demise of the free ISP model in New Zealand.

Wellington-based internet service provider Actrix has announced a "rescue package" for disgruntled users of i4free and other free providers.

According to marketing manager Neil Buckley, Actrix will offer two free email addresses and a one-time offer of up to 20 hours of free surfing time. After the 20 free hours has expired, users would still be able to send and receive emails, but would have to pay to use the web.

Ihug managing director Nick Wood said he was expecting a greater load on his company's network as many customers who also maintained free accounts made more use of paid-for services.

"You only have to look around the rest of the world to see that the free model is not viable," Mr Wood said. "In Australia, for example, the concept never even left the starting gate."