Free revisited!

In a NyT article LIA MILLER brings to our attention a new business model that is trying to offer WiFi services free to consumers. The idea is to earn enough bucks through advertisements...

AnchorFree, a company in Sunnyvale, Calif., that is two and a half years old, has introduced a service that lets merchants of any size — from a large bookstore chain to a mom-and-pop restaurant — offer free advertising-supported Wi-Fi to customers on the store premises. People who are shopping or eating in an AnchorFree location will see banner ads on their screens or short video spots or both before their browsing session.

Interestingly AnchorFree is not alone in its endeavor to promote advertisements supported free services. While the jury is still out on this approach atleast some consultants are impressed

“New economic models around advertising are disruptive,” Mr. Ayvazian said. “If companies like AnchorFree can add a new layer of innovation around free broadband access, they can be disruptive again and take market share.”

While all this sounds good, the million dollar is will this model work? To answer this question let us step back to the late 90s. Back then Dial up internet access was what Wifi is to the consumer now. A new cutting edge technology whose adoption was about to explode. And to draw parallels with AnchorFree even then there were companies who wanted to provide internet services free and hoped to make money out of advertisements.

You don't need free connectivity to figure out the peg: the Caltiger brandname. Reiterates Silva: ''The free ISP created tremendous brand recall. But we have always been a telecom infrastructure provider.'' Caltiger's free ISP-warts and all-was a smash hit, racking up the subscriber base from 14,000 in March, 2000, to 2.5 lakh five months later. On an equity base of Rs 35 crore, Caltiger's valuation skyrocketed to Rs 600 crore. A domestic IPO was slated for October, 2000, followed by a listing on the London Stock Exchange.

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The premise is simple enough: generate enough advertising revenue to offset the cost of access. Caltiger asserts that it is able to realise higher revenues as a result of demographically-targeted advertisements.

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Was it sustainable? hell no...the company went bust within two years leaving behind a lot of disappointed investors.

Caltiger, the erstwhile free internet service provider, seems to have shut down operations completely. Patriot Automation Projects, the Kolkata-based company which owned and promoted the Caltiger brand, has wound up its Kolkata and Mumbai offices and the ISP’s 100-odd employees have been laid off, according to sources. The shut-down, which sources say took place last month, comes 14 months after Caltiger switched to the paid ISP model.

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