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Net use stunted by phone monopolies, study says

People in countries with government-regulated phone monopolies spend less time online than they do in countries that allow competition among phone companies, according to Nielsen/NetRatings.

A new study says that people in countries with government-regulated phone monopolies spend less time online than they do in countries that allow competition among phone companies.

Net use trends
Average Internet usage for six countries in March 2000.
Country Sessions per month Page views per month Time spent per month
United States 19 670 9:42:57
Australia 14 515 7:50:09
Ireland 9 352 4:23:21
New Zealand 16 462 7:57:16
Singapore 12 468 6:18:07
United Kingdom 12 414 5:17:29
Source: Nielsen/NetRatings
In addition, people who surf the Web in those countries mostly visit Yahoo and the Microsoft Network, according to the survey, conducted by Nielsen/NetRatings.

The study concluded that government-controlled phone companies have stifled Internet growth because of the additional expenses incurred by Net users. In the United Kingdom, for example, people are charged by the minute for local telephone calls.

But in countries that recently have loosened their control of telecommunications systems, such as Australia and New Zealand, people are spending more time online and are making more frequent visits to the Internet. Both countries have allowed phone companies to compete for consumers, thus driving down the costs for phone services. That, in turn, has moved Australians and New Zealanders to use the Web for longer periods of time, the study said.

For example, the study showed that the United Kingdom's 7.6 million Internet users spend 27 minutes online per session. In contrast, Australia's 6 million Net users spend 34 minutes online per session, and New Zealand's 1.2 million Net surfers spend 29 minutes online per session.

"In most countries where the government has played a significant role in the control of phone lines and phone companies, there's this second layer that impacts growth of the Web," said Allen Weiner, vice president of analytical services at Nielsen/NetRatings.

The study may give perspective to U.S.-based Internet companies that are trying to step into these markets. As America Online has shown in its attempts to penetrate the United Kingdom, formulas that are effective in the United States do not necessarily work in highly regulated telecommunications markets.

For example, AOL, which dominates the U.S. market, has struggled to make significant inroads with its European venture. The online service was blindsided by the popularity surge of free Internet service providers such as Freeserve.

In response to the competition, AOL Europe last year launched its own U.K. free ISP, Netscape Online, but the service trails the local leaders.

In the United Kingdom, Internet users must pay per-minute fees to British Telecom. This, according to Weiner, has allowed "free" ISPs such as Freeserve and Virgin Net to increase in popularity. These services are considered free because they do not charge subscription fees; however, surfers still get charged by the minute, and the companies get a cut of those fees.

In contrast, U.S. customers pay flat local phone rates, so their expenses lie in subscription fees. Some people have begun to use free ISPs such as NetZero or AltaVista to access the Internet, but in exchange, they must accept elements such as persistent ad banner windows.

The study compared Web usage in five countries--the United Kingdom, Australia, Ireland, Singapore and New Zealand--to that in the United States.

Nielsen's numbers showed that popular U.S. portals such as Yahoo and MSN have made significant inroads into these countries' markets. MSN was the top domain in the United Kingdom, New Zealand and Australia, for example, and Yahoo was the most-visited site in Singapore and Ireland.

The positive performance from both companies is partly because of the success of their local partnerships, Weiner said. In addition, Web applications such as free email, address books and calendars appeal to international customers.

"They've done a great job in taking their model and bringing it overseas," Weiner said.