New York-based Freewwweb is the latest ISP to stumble after venturing into the marketplace to offer free, advertising-supported Internet access to consumers.
"I think the days for new players to enter the market and build a brand name from scratch are over, " Jupiter Communications senior analyst Zia Daniell Wigder said. The free ISP space "certainly is one that is right for consolidation, one where we have already seen a lot of bodies littered at the side of the road."
Last month, online shopping portal WorldSpy ceased its operations, referring to Juno more than 260,000 subscribers of its no-charge, ad-free Internet access.
"Some companies are able to achieve critical mass, but others are not able to, and what you're going to see is a trend toward consolidation," Juno CEO Charles Ardai said. "It's an opportunity for us to expand our subscriber base significantly."
Juno said it received a court approval yesterday for a subscriber referral agreement with Freewwweb, a subsidiary of Smart World Technologies.
Under the agreement, Freewwweb will receive compensation in the form of Juno common stock, as well as smaller amounts in cash, for each former Freewwweb subscriber who becomes a Juno subscriber. Subscribers will continue to receive free Internet access and email sent to their Freewwweb email addresses. They will also have the option of upgrading to one of Juno's billable premium services including its high-speed service, Juno ExpressSM.
Although Freewwweb's demise is a plus for Juno, analysts say that consolidation is inevitable.
"It's a tough business for anyone jumping into to try to make work," Wigder said.
Freewwweb, which filed for bankruptcy last month, declined to be interviewed.