SAN MATEO (06/12/2000) - We've said it before, but it bears repeating: On the Internet, you should not believe anything is really "free" until you read all the fine print. And even then you'll need to re-read it all frequently to make sure that what you thought was free is still free.
The latest example of this comes from readers who were among the first to sign up with FreeDSL.com, a broadband service provided by Winfire Inc. (formerly known as Broadband Digital Group). FreeDSL, they discovered, is not really free. In fact, it might turn out to be quite expensive.
One reader started getting suspicious when he was required to give his credit card number even though he had earned a free DSL modem by referring 10 other customers to FreeDSL. "So why do they need my credit card info for a totally free service?" he wrote. "They say [it's because] I could be liable for a $400 fee -- $200 if I cancel the service and $200 if I don't return their 'free' modem when I stop using the service. I thought that 'earning a free DSL modem' meant it was mine to keep rather than a loan."
Not surprisingly, considering that it's buried 8,320 words deep into a 9,348-word document, this reader and others had missed the part in FreeDSL's terms of service (TOS) where it says there's a $200 cancellation fee for terminating the service before the user's 13-month commitment ends. The TOS document also says that customers must return the "free" (even Winfire's lawyers put quotation marks around the word) modem within 10 days of discontinuing the service.
FreeDSL customers who weren't expecting "free" modems were also finding that the service didn't work as they were led to believe. "I was one of the first 100,000 to sign up on the first day and downloaded their ad banner software," wrote another reader who already had a DSL modem that appeared to be compatible with FreeDSL's requirements. "There was absolutely no mention of having to buy/change to another type of modem. After several months the e-mail came that they were ready to start the hookup process and please send them $200-plus to buy [an Efficient Speedstream] modem. So I send off an e-mail to FreeDSL explaining that I didn't need their modem since I had one that would work.
Can't do that, they say. It seems that you must buy or lease their modem or no hookup! This [in my humble opinion] negates the 'Free' part of their moniker ..."
Winfire officials have some very reasonable explanations for these assorted $200 fees FreeDSL users might have to pay. According to Grant Johnson, vice president of marketing at Winfire, the company has to charge an early cancellation fee to cover the costs it will incur with the customer's local exchange carrier. "We have our own backbone, but like all DSL providers, we must go through the carrier in the customer's area to activate a line," Johnson says. "We pay the service initiation fee, but should the customer cancel the line prior to 13 months, we also have to pay a cancellation. So we are just passing our costs on to customers who cancel before their commitment is up."
Johnson acknowledges that Winfire does want its "free" modems back when customers terminate the service. It's also true that only Efficient Speedstream modems -- the ones the company sells -- can be used with FreeDSL right now, but Johnson hopes that will change.
Fair enough. I don't have a problem with Winfire charging an early cancellation fee or not being able to support a variety of DSL modems. What does concern me, though, is how many early customers feel they were misled about how FreeDSL would work and how Winfire seems to believe that people will actually read that insufferably long TOS document. "It's all outlined very clearly in our terms of service," was the common refrain FreeDSL users reported getting to any complaints or queries.
In fact, the only thing that's really clear in the TOS is Winfire's "sneakwrap" provisions, which are everywhere. Winfire repeatedly asserts the company's right "from time to time" to change fees, service levels, and all terms of usage, privacy, and so on, and posting the changes in the TOS or associated documents might be the only notice they give. In other words, Winfire has the right overnight to make the free service very expensive and to charge you a cancellation fee (which they can also change, of course) if you drop the service as a result.
"Hypothetically, that could happen," Johnson says. "But that's a going-out-of-business situation. Prices aren't going to go up; we think they'll get better and better."
If FreeDSL is a big success, it's probably true that customers won't have to worry about Winfire forcing them to accept price hikes or pay hefty cancellation fees. But what if Winfire finds its business model isn't working?
Let's talk a little more next week about sneakwrap terms and "free" Internet services.
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