Excite Offers Free Net Access

1stup.com, a quiet leader of the free-ISP movement, has struck again.

Today, ExciteAtHome becomes the second major portal site to offer free Internet access for those who connect via telephone. The company will support the service through advertising, as in broadcast television. Excite (ATHM) gets a cut of the revenues and a new service to attract and keep Web users at its site.

The company is following AltaVista, which had already signed up with 1stup to provide free, supported Net access through its Web site.

"From an economic standpoint, being a free ISP is tough, but not impossible," says George Bell, president of ExciteAtHome. "They key is, do you think you can generate enough revenue?"

To succeed, Excite and 1stup will have to sell enough banner ads to support the dial-up business, which Katz is confident he can do. "We've proven that our technology works, and we've proven thebusiness model works," says Charles Katz, CEO of 1stup. "There's no one else who has done what we've done already."

1stup claims more that 1.5 million subscribers, a figure that puts it among the top ten Internet service providers in the country. Outside of the AltaVista deal, the company has announced partnerships withWashington-based TV station WJLA and sites like Gay.com. In addition, the company has finalized dozens of partnerships that it has either quietly announced or is preparing to launch. Katz predictsan "oncoming avalanche" of deals.

1stup was founded by a couple of college buddies from Stanford University who, even though they had no product to show, hung around the AltaVista offices in Palo Alto, Calif., and pressed the company for a distribution deal. That proved to be a very lucky move. When CMGI agreed to acquire AltaVista in September, the larger company decided that 1stup could serve as a valuable feeder company for some of its other properties.

The company that made free access seem practical was NetZero, whose nearly 2 million registered users put it in the top tier of ISPs. But NetZero refuses to use partners to sell its service, offering itsservice only under the NetZero name. "We don't consider ourselves a competitor with NetZero, but with the distribution we get from AltaVista and Excite, it shouldn't be too hard to break through their numbers," says Katz. "They still have about a six-month head start on us."

"Analysts are predicting something like 13 million free ISP subscribers by 2002," Katz says. "I think that is too conservative. You're going to see deals with brick-and-mortar companies, computer manufacturers, and a whole number of online and offline companies."

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