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Wednesday, 23 August, 2000, 14:55 GMT 15:55 UK
Internet suffers from the hard sell
By BBC News Online internet reporter Mark Ward
The overselling of all things internet is leaving consumers frustrated, cynical and wary, experts warn.
The fiasco of Altavista's unmetered internet service, the relentless hyping of the mobile internet and broadband access are only disappointing consumers and making them reluctant to try the new technologies.
Studies show that some people are already turning away from the web because they see it as just another fad that isn't fashionable anymore.
But analysts say the disappointments and cynicism will only postpone a net boom rather than prevent it.
Altavista's high profile climb down on unmetered internet access left hundreds of thousands of consumers frustrated. However, it may have had an even more damaging effect on those that have yet to go online.
"This just makes it more confusing and leaves the millions that have not come online more cynical and more worried," he said.
He condemned companies such as Altavista for launching services to grab customers rather than working out how they would provide a decent service.
"If you have not got a product sorted out, and don't know if you can deliver it, then don't launch it," he said.
Ray Perry, director of marketing at the Chartered Institute of Marketing, said Altavista may have done itself irreparable harm by letting down so many consumers.
"If consumers do not have confidence in the company they are are not going to deal with it," he said.
Mr Perry added that technology companies were making classic mistakes as they rush to grab customers in the face of stiff competition.
Companies are promising too much or overselling technologies leaving consumers disappointed and wary of buying things as mobile phones, unmetered net services, broadband access or phones that use the Wireless Application Protocol (Wap).
Mr Scorer from the Consumer's Association said attempts to sell Wap as putting the internet on your mobile phone were "fatuous" and gave a false impression of what was possible.
Despite the hype and the BTCellnet "silver surfer" adverts, Wap phones are not proving popular in the UK.
According to BT only 200,000 of them have been sold in the first few months of the year - far fewer than the 500,000 anticipated.
Now banks such as Egg, Cahoot, Intelligent Finance, firms like Tiny computers and travel firm Going Places are giving them away free when customers take up special offers.
Mr Perry said disappointing customers was dangerous for technology companies that have limited contact with consumers and little high street presence.
"For online companies such as Altavista brand trust and the trust the customer places in your company is totally driven by your actions," he said.
Weakening the brand with failed promotions or overselling a technology makes consumers harder to convince and more likely to look elsewhere for better service.
Some people are already turning off. A study by Sally Wyatt from Brunel University has found that US teenagers are using the web less because they see it as a fad or lose free access when they leave college. Wyatt expects the trend to make itself felt in the UK too.
"I think most people will come back but they will be harder to convince next time because they are more cynical," said Lars Godell, European telecoms analyst at Forrester Research, adding that brand identity and trust will become more important.
He warned consumers to prepare for more disappointment as the quirks of the UK telecommunications market make themselves out.
Internet service providers that do not have the backing of a telecommunications company will find it far harder to survive as flat-rate broadband services become the norm.
As ISPs offer high speed services for the same basic cost, only those that can extend access across many devices or offer more than basic connections will stay in business said Mr Godell.
"Only the bigger players with strongest brands will be able to make up the shortfall in access fees," he said.
Online is alright
Nick Lansman, spokesman for the Internet Service Providers Association, said it was wrong to take the Altavista incident as evidence that the UK net industry was in a mess.
"There are millions of people who are happy to pay a little bit to get good service," he said, "People should not be despondent and avoid the net."
There is no doubt that changing the cost of unmetered access does make a huge difference to how long people spend surfing.
At the end of 1997 surfers in the US, UK, France and New Zealand were spending the same amount of time online, around 6 hours per month according to figures collected by the OECD.
But the introduction of unmetered services has radically altered patterns of use.
In the United States, the average AOL user is online for around 32 hours per month.
Since Telecom New Zealand introduced unmetered access in July 1999, the amount of time spent online has been steadily increasing.
Now the average Telecom New Zealand subscriber spends over 20 hours online a month.
But French and British net users, who have to watch their telephone bill while surfing the web, stay online for just nine hours per month.
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