Not that the industry hadn't seen it coming. As far back as July 2000 IDC was describing the model as unsustainable saying it lacked "commercial reality". However services such as FreeOnline, GoConnect.com and Globalfreeway battled on regardless.
Mind you it's little surprise that no one was prepared to listen to the analysts given that just six months before IDC had predicted 2000 would be the -Year of the free ISP".
In theory the business model allowed the service to subsidise the free access through advertising revenue. In practice the bottom fell out of online advertising, just as the services were getting off the ground, and data hungry Internet users were increasingly prepared to pay for services which better fed their habits.
Dennis Muscat, managing director of ISP Pacific Internet says that although free ISPs succeeded in raising the awareness of the Internet, and provided many with a taste test, the service itself was often poor.
-Once they understood a little more about the Internet people were willing to pay for quality service," Muscat said. -The Internet is now a fundamental part of business as well as leisure."
According to Muscat the free ISP phenomenon also lead to a proliferation in the number of ISPs operating in Australia, which has in turn lead to a period of consolidation in the market.
-Other ISPs can learn from the challenges and victories of the free ISP model," Muscat said.
Similarly Martin Dalgleish, managing director of Optus Consumer and Multimedia believes quality of service took precedence over price, leading to the failure of the free ISP model.
"That OptusNet and Optus@Home customer numbers have continued to grow steadily throughout 2001 is testament to the fact that more and more consumers are looking for quality and reliability from their ISP," Dalgleish said. -Many free ISPs didn't meet expectations and let customers down."
In fact rather than focussing on scaled down, bargain basement style services, Australia's principal ISPs are looking at a range of ways to value-add their services offerings.
The decline and fall of the free ISPs was a drawn out process, involving a combination of the gradual whittling away of the -free" services, and some rather spectacular crashes. In November 2000 FreeOnline began to cut off free access to all customers visiting -non-partnering" sites. By March 2001 Globalfreeway passed into the control of receivers, affecting 15 staff and over 210,000 subscribers. At midnight August 31, FreeOnline apologised for any inconvenience and switched off its service. And on October 4 GoConnect finally bit the bullet and terminated its Free Plan services.
Now more than ever, when it comes to Internet access, you get what you pay for.
Its interesting that the free ISP was such a flop here in Australia when, in the UK, the majority of ISP's are free! I suspect the problem lies with the business model. Here in Oz it's the "tell us everything about you and in return we'll give you the crappiest internet experience you can imagine!"; whilst in the UK free ISP's are extremely competitive and offer a range of services to users.