Business News - Free Service Torch Continues to Burn

Posted: 08/2000

Free Service Torch Continues to Burn
By Chris Garifo

The free service model continues to grow beyond its ad-supported Internet access roots to include other IP-based services, including PC-to-PC and PC-to-phone long-distance, e-mail and unified messaging services. One company even has taken the strategy a step further and announced in June that it will pay its customers to make free calls.

Go2Call.com (www.go2call.com) began offering free long-distance VoIP calls to Germany, Ireland and the United Kingdom in early June. "In our first day, we had well over 1,000 registered users," says John Nix, Go2Call.com co-founder. "Fortunately, free phone calls have what we call a 'viral effect.' Every time you place a call and you're talking to someone, it's an opportunity to tell them that you're calling for free using Go2Call. So, it has the effect of a person tells two friends, who tell two friends, and so on. So, it's very much in line with word-of-mouth-type marketing as a source of traffic for us."

TELECONOMICO Inc. also enjoyed quick expansion of its free international long-distance calling service at www.hottelephone.com, which began on June 5 offering calls to 15 countries. Two weeks later, the company doubled its offering to 30 countries.

These summer debuts followed the May announcement by PhoneFree.com (www.phonefree.com) that it had added free PC-to-phone calling to its current offer of free PC-to-PC calling, video calling, video mail, voice mail and teleconferencing. The company also offers free voice mail. Also in May, IDT Corp. (www.idt.net) launched its FreeAtLast.com (www.freeatlast.com) service offering unlimited, unrestricted Internet access, e-mailing and PC-to-PC calling free of charge.

Like most free communications services, TELECONOMICO makes money through advertising, especially the banner ads that have become a tradition on the Internet. "We find that people don't mind if they're making a phone call and banner ads are going by [on their screens]," says Richard Lee, TELECONOMICO's vice president of marketing.

In addition to web advertising, Go2Call also earns revenue through its online store, which offers speakers, microphones, headsets, digital cameras, telephony books and FoneNet Connect, a device that allows a regular phone to be used to place an Internet call.

In a similar fashion, Televant Inc. is planning to support its free service through its online store. The company launched its Callrewards (www.callrewards.com) program in June. Callrewards members earn points by making calls, referrals, reading a targeted e-mail, visiting select websites, buying products online, listening and viewing advertisements and answering surveys. Points will be redeemable for international calling, other merchandise and gift certificates by the end of the third quarter.

"The free calls are supposed to get us lots and lots of customers very easily for relatively low cost," Nix says. "For a lot of Internet businesses these days, the hard part is getting customers in the door. Whether online or traditional retailing sites, it's very competitive. It's hard to get customers, and there are lots of companies offering similar services. ... By giving away free phone calls, we can get lots of people there cheaply."