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Paid-for ISPs take a beating from free model

Research points to a rapid decline

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The number of people signing up for subscription-based ISPs is falling so quickly it's like Michael Schumacher hitting the barrier in the British Grand Prix and coming to a bone-breaking halt. According to the quarterly Internet report from investment bank Durlacher, the growth of subscription-based services has decelerated from 80 per cent a year to less than one per cent. And this has come at a time when dial-up use has grown by 66 per cent over the last 12 months bringing the total number of users to 5.8 million people in the UK. If true, this research appears to support anecdotal evidence that subscription based services have been hit hard by the Freeserve revolution. There are now 95 subscription-free services in the UK and this figure will rise to 200 by the end of the year, according to Durlacher. Charles Nasser, MD of UK independent ISP ClaraNet said that he wasn't surprised by findings of Durlacher's Quarterly Internet Report adding that his company was still experiencing steady growth in all the sectors. "We must be the exception to the rule because we're still experiencing high growth," he said, without divulging exact numbers of dial-up users. Indeed, ClaraNet's new FreeTime subscription-based service, which offers users toll-free access to the Net, is receiving 1000 enquiries a day, he said. Earlier this month, a ClaraNet representative told The Register that he was not expecting people to be "clamouring to join" because of the FreeTime packages alone. But before anyone starts sounding the last post for subscription-based services, Durlacher's Nick Gibson believes that free services could face a bleak future. "Most subscription-free ISPs, including Freeserve, offer little to differentiate themselves and provide little or no barriers to exit for subscribers. "As long as users can switch accounts so easily, free-ISPs leave themselves vulnerable to churn," he said. ®

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