September 13, 1999 5:00 AM PDT

Consumers sometimes pay the price for free email

When it comes to free Internet services, sometimes you get what you pay for.

Millions of Net users, particularly newer ones, are flocking to free Web-based email accounts and free dial-up Internet service providers. But a recent rash of outages, security snafus, postponed public stock offerings, and privacy blunders have raised questions about the quality of service consumers can expect when they get something for nothing.

Excite@Home's free Web-based email service Excite Mail has suffered limited outages for the past two business days, the company confirmed Friday.

The company's problems come on the heels of recent outages at Microsoft's competing free Hotmail email service, as well as a major security breach that may have compromised Hotmail users' privacy.

The troubles for free Net services don't end there. For example, USA.net, a Web mail service and outsourced corporate email company, pulled its planned IPO in August.

Together, these shortcomings seem to constitute a worrying trend, leaving consumers to wonder whether free services are worth it, or whether the young Internet industry can make good on its promises.

One explanation for the service problems: Free Net services often have trouble handling a high volume of usage, company executives and analysts say. Many times, free services--whether they are online or not--do not properly anticipate the level of demand they create, they said.

"You're starting to see more and more people using these free services. The network infrastructures might not be able to deal with the demands that the customers are placing on the networks," according to Michele Pelino, an Internet analyst at The Yankee Group.

Increased publicity surrounding free personal computers, free ISPs, free cellular phones, and other pay-nothing technology equipment and services has contributed to the increased demand.

"There's been a lot of press out there. Now people are taking them up on [free services]," Pelino said. "They better be ready for the demand that's going to happen."

Yet some analysts downplayed recent outages, and pointed out that even AT&T and MCI WorldCom have suffered their share of service failures. "Even paying a premium doesn't guarantee service," said Robert Rosenberg, president of Insight Research.

But Rosenberg said consumers are more likely to have a higher level of service from providers that charge a fee for service.

"My dad always told me there's no free lunch; you get what you pay for," he said. "If you're using a free service, don't bitch--have a backup."

Of course, many customers are immensely satisfied with their free Net services. And, companies such as NetZero and AltaVista have made an impact on the ISP industry in relatively short order.

Customer service is often another weak spot for free service providers, analysts said, because the Internet's so-called newbies often flock to free services and bombard customer service departments with frequent inquiries.

But quality concerns aren't the only questions with free Web services. Free ISPs in particular are supported by tightly targeted advertising, and in return for the service users agree to give up demographic data and allow the ISP to track their movements online.

Analysts say this sharply limits the market, as many Web browsers are unwilling to give up that amount of privacy in order to save roughly $20 a month. A study circulated by AltaVista earlier this week bore this out, finding that only about two out of five Web users would be willing to give up their privacy in exchange for free access.

News.com's John Borland contributed to this report.

 

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