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FreeDSL goes live

The Broadband Digital Group launches an ambitious experiment in giving away free high-speed Internet connections and is set to make an official announcement.

An ambitious experiment in giving away free high-speed Internet connections is set to kick off officially today.

As earlier reported, the Broadband Digital Group launched its FreeDSL.com service on April Fools' Day, with the official announcement slated for today.

The free service will be presented to the public as the cheapest in a new series of bargain-basement deals being launched by high-speed Net companies desperate to attract subscribers to their technology.

Separately, SBC Communications and Excite@Home are each offering temporary sign-up bargains that bring broadband services closer to the price of ordinary dial-up Net access.

FreeDSL has struck deals with a list of major local telephone companies and local alternative providers in an attempt to reach most of the major metropolitan areas by the end of this year, a goal that would make it one of the most wide-ranging high-speed Net providers in the country. Its service uses digital subscriber line (DSL) technology, which allows ordinary telephone lines to handle regular phone calls and high-speed data at the same time.

Its entry-level service will be supported by advertising. A basic connection, which will provide downloads about three times faster than the fastest dial-up modems, will be free as long as subscribers agree to keep a standard Web advertising banner on their screens at all times and allow their movements online to be tracked by a targeted advertising service.

The company is betting it can persuade its subscribers to pay for faster service and no ads, however. Consumers can pay about $10 a month to have the ads turned off completely or about $20 a month to upgrade to a connection more than seven times as fast as dial-up modems.

Paying $35 a month--close to the same price as the average entry-level DSL connection or a basic cable-modem connection--will give FreeDSL subscribers a connection of 1.5 megabits per second, or more than 27 times as fast as dial-up modems.

That's an ambitious set of services for a company that already has about 740,000 potential subscribers signed up. Analysts say it will be difficult to make back the cost of equipment and service. Even free dial-up ISPs, such as NetZero, which has attracted several million subscribers, have yet to reach anywhere near the realm of profitability, they note.

"I'm a little skeptical right now," said Brent Bracelin, a communications analyst with Pacific Crest, a technology-focused investment bank. "The reason why free dial-up economics work is because it's a mature technology. But with DSL, you're talking about very expensive equipment costs."

The company is also looking at more innovative ways to eke dollars out of advertisers, however. Company founder Ryan Steelberg said he is testing a way to control subscribers' connections so that individual Web sites would download considerably faster. Thus, if Yahoo paid for advertising, anyone going to a Yahoo site would see pages load much more quickly than nonpaying competition.

The service will initially be available in Atlanta, Dallas, Chicago and Los Angeles, the company says. By early May, it should hit San Francisco and Seattle, then slowly spread out to 40 urban areas by the end of the year, Steelberg said.

The backlog of customers waiting for DSL service in many of these markets could cause a wait of several weeks or more for the FreeDSL service, Steelberg said. In order to keep potential customers happy, the company will provide these subscribers with free dial-up service in the interim, he said.

News.com's Corey Grice contributed to this report.