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NETZERO TO CHARGE FOR HIGH USAGE.

Byline: Jesse Hiestand Staff Writer

Information may want to be free on the Internet but getting there is becoming less so, with free Internet service provider NetZero Inc. moving to charge customers for going online more than 40 hours a week.

The move by the Westlake Village firm marks the latest retreat by free ISPs from giving away what would otherwise cost about $20 per month if users allow banner advertisements on their screen while online.

Beginning in January, users of NetZero who exceed the monthly limit will be cut off unless they pay $9.95 for unlimited ``Professional'' service through the end of the month, when free service resumes.

Only about 12 percent of NetZero's customers are expected to be affected. They are the heavy users the company says account for more than half of the telecommunications costs it pays to get them online.

``This new service plan is intended to enable us to continue to provide unlimited Internet access to these professional users without impacting our ability to provide the same high-quality, free Internet access to the other NetZero members,'' Chairman and Chief Executive Officer Mark R. Goldston said in a statement.

In one sense, NetZero is a victim of its own success, with Goldston noting that membership is up sharply because other free ISPs have recently shut down.

Those include Altavista's service, which cut off 3 million users this month when the company providing the connection, 1stUp.com of San Francisco, was shut down by its parent company, CMGI Inc.

That leaves three major free ISPs - NetZero.com, Juno.com and BlueLight.com, none of which allow unlimited usage.

BlueLight.com, part of Kmart Corp.'s e-commerce division, recently capped its free access to 25 hours each month.

Like NetZero, officials at San Francisco-based BlueLight.com said a small percentage of heavy users were accounting for a disproportionate amount of telecommunications charges.

Juno.com, which has 2.9 million active users of its free service, compared to about 3.3 million for NetZero, has taken a different tack on dealing with the 5 percent of users who account for half or more of its costs.

Rather than limit usage to a certain number of hours, Juno's president and chief executive officer, Charles Ardai, said the company is giving priority to its 750,000 paying customers, followed by average users of the free service, then heavy users.

``The heavier of a user you are the more advertising you might see - so we can try to earn back some of the costs you incur for us - and you might also find it harder to establish a Web connection, especially during the busiest hours,'' Ardai said.

``The goal is to get people to either alter their usage habits so they become light users or switch to one of our billable services or continue using the free service except under the new constraints,'' he said.

Free ISPs have been driven to these measures because their main source of revenue, advertising, has declined significantly since several of the dot-com companies that did the advertising have shut down or curbed spending, he said.

At the same time, investment capital has dried up and more people are going online, for longer periods, Ardai said.

``I do think it's reasonable for customers to expect that some of the things they've gotten for free in the past will carry a fee in the future,'' he said.
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Dec 30, 2000
Words:570
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