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BlueLight limits free ISP business

The Net unit for the retailer confirms it will begin adding fees to its free ISP, following other dot-coms that are pasting prices onto previously free giveaways., the Internet unit of behemoth retailer Kmart, confirmed Friday that it will begin adding fees to its free Net access service, following other dot-coms that are pasting prices onto services previously touted as giveaways.

San Francisco-based BlueLight also told CNET that as of Feb. 1, the company ceased providing free online services for Costco, Barnes& and Spiegel.

BlueLight got into the free Internet service provider business after acquiring selected assets of, which had shut down, in December. Spinway had provided free Net access to BlueLight's roughly 6 million customers as well as to customers or employees of companies including Yahoo, NBC Internet and Hewlett-Packard.

Dropping the free ISP model reflects a growing trend by companies that say the offering doesn't bring financial success. Web portal AltaVista shuttered its free Internet access, and the company's parent, CMGI, terminated its free ISP holding, Last June, Juno Online Services purchased pieces of failed free ISPs Freewwweb and WorldSpy. Juno itself has struggled with the free model, and in November imposed some restrictions on heavy subscribers.

"The free unlimited model is dead," said spokesman Dave Karraker.

When BlueLight bought Spinway, it had continued providing service to other companies, Karraker said. The company found, however, that many customers were using the Spinway service to play video games, download music or conduct business transactions instead of using it to shop.

"They weren't using the service to shop at BlueLight," Karraker said. "Our goal was to use the ISP service to bring people to buy on BlueLight."

As part of the new plan, the company is unveiling a three-tier pricing strategy scheduled to begin in March. The basic service, designed for people who do little more than check their e-mail, will allow free Internet access for up to 12 hours a month.

BlueLight's Premium Service will offer 60 hours for $9.95 a month, and the top-of-the-line service will provide unlimited access as long as the customer makes a purchase at least once a month from BlueLight.

"They can buying anything--a $2.99 doll--and receive unlimited service," Karraker said.