The UK is surging ahead of its main European rivals in Internet adoption thanks to the revolution in free access to the World Wide Web, a major new study has concluded.

Datamonitor's Steven Adshead on free ISPs' impact

Nearly 40% of the adult population now has a home computer and almost 20% have Internet access through it, according to a survey carried out by Datamonitor and NOP.

But Germany only has one in three people with Internet access from their PCs at home compared to the UK's one in two, while for France, Italy and Spain, the figure is one in four.

freeserve's unique features

"Free Internet access has really boosted the UK market compared to the rest of Europe," said Datamonitor consultant Stephen Adshead, referring to the impact of Dixons' freeserve and its imitators.

The survey, which interviewed 12,500 consumers in five countries in March and April, also suggested Net users were not using freeserve as a second ISP (Internet Service Provider) to complement their traditional service provider.

Seventy-six per cent of freeserve users were members of only that service, compared to 74% unique users for the next-largest ISP, AOL. And 92% of freeserve's users were satisfied customers compared to 90% at AOL.

Battle for loyalty looms

But with the growing number of free ISPs, Datamonitor expects users with multiple accounts, now only 11% of the market, to increase markedly and the new profit measure will be on usage of services rather than head counts.

It expects to see ISPs battle for usage through the offering of loyalty schemes, more being offered for free such as telephone calls, content and support, and more value-added services.

Traditional service providers charging a monthly subscription will either have to promote added features or go free, as many already have done, the report concludes.

It says those continuing to charge will either have to emphasise superior content, speeds of access or quality of service.

Internet content/service providers also face serious competition in the e-commerce field from the advent of interactive TV, says Datamonitor. It says the fight will be over banking, e-mail and shopping services.

LineOne triples users

LineOne is a case in point of a traditional ISP going through a rapid transformation in response to the impact of freeserve.

It went free itself seven weeks ago and new managing director, Ajay Chowdhury, says it has already tripled its customers to 240,000 registered users.

LineOne began as a joint venture between News International and BT, offering dial-up access to the Internet through a portal which included the content of the Times, Sunday Times, Sun and News of the World.

United News & Media took a 33 per cent stake in the business in March 1998 and the content of the Express and Star was added.

News International broke away this year to launch currantbun.com, a free ISP service including The Sun's content, leaving the business shared between United News and BT.

Being mother to boost business

LineOne has now invented a "mothering" concept to expand its business. It will provide companies wanting to set up as free ISPs with the backend technology and the LineOne content for them to include and market with their brand.

The Express newspaper was the first to exploit the concept with a service set up in less than three weeks and marketed through cover-mounted CDs. Meridian TV and a number of other companies are lined up to follow suit.

LineOne allows the companies to do marketing and distribution and is involved in revenue-sharing agreements. The company now makes money from access calls to the service, advertising, sponsorship and e-commerce.

Chowdhury: Busy being born

"We have context-based selling, such as cookery books sold in the Food and Drink section," says the LineOne MD. "E-commerce has gone up six-fold since the beginning of the year, books, flowers and software are the most popular items."

United News & Media has been reinventing itself as a New Media company, it has an interest in interactive television and bought the US technology media group CMP last week.

Ajay Chowdhury, who was previously managing director of United Interactive, sums up the constant need for growth and change in the business with a Bob Dylan line: "He not busy being born is busy dying," he says.

CIX reborn with new services

Busy being reborn now is the Compulink Information eXchange or CIX, established way back in 1984 and providing online computer services , with conferencing and e-mail introduced in 1987.

CIX was the subject of a management buy-in last year and has met the free ISP challenge by diversifying and further specialising. It stresses its quality of service, endorsed by Internet Magazine naming it "ISP of the Month" in April.

CIX has also been boosted by its recently-acquired US subsidiary InfoNetworks being accredited to issue the main Internet domain names following the deregulation of the market. CIX plans to start issuing .com, .net and .org top-level domain names on June 25.