In what some analysts called the biggest challenge yet to leading Internet service providers that charge customers monthly fees, Excite At Home Corp. yesterday became the latest player to offer free dial-up access.
Company President George Bell said Redwood City, Calif.-based Excite hopes users of its new free service, which sends data through traditional phone lines, will eventually upgrade to its high-speed "broadband" service, delivered through larger electronic "pipes." The price for the faster service will remain about $40 a month.
The new service will be offered through a partnership with San Francisco upstart 1stUp.com Corp., which was just purchased by CMGI Inc. Excite officials said the company hopes to offset expenses for the new service by selling online advertisements. They also said they plan to market the free product through a series of retail partnerships similar to the ones recently announced to promote America Online Inc.'s services in Wal-Mart stores and Microsoft Corp.'s MSN Internet service in Tandy Corp.'s Radio Shack stores.
Analysts said this strategy will put Excite, whose largest shareholder is AT&T Corp., in a leading position to capture the next generation of Internet users who will no longer be satisfied with sluggish dial-up service. While only about half a million Americans today pay for high-speed service, Forrester Research Inc. expects that number to shoot up to 26 million by 2003.
A recent Excite promotion entices customers of America Online Inc. with reimbursements for two months' worth of AOL service if they upgrade to Excite's broadband service. But AOL officials have repeatedly said they are unconcerned about free services and that they believe people will pay for AOL's unique content. "We believe that we offer the best services for both the value segment and the premium market segment," spokeswoman Trisha Primrose said.