As previously reported, Ameritrade will offer unlimited Internet access at speeds up to 56K, voice mail, 100MB of online storage and 24-hour customer support to its customers. The navigation bar will have advertisements and links back to the online brokerage's site.
Following on the heels of Ameritrade's announcement, Net broker Quick & Reilly also said it is offering its clients free Internet access across the United States and Canada, effective immediately. The company is offering the service through a deal with 1stUp.com, a San Francisco-based company that was bought by CMGI last year for $60 million. Quick & Reilly clients will have unlimited Internet access in exchange for keeping the Internet service provider's navigation bar on their screens. The bar flashes advertisements and links to other sites.
The moves come as an increasing number of brick-and-mortar competitors are adding online trading to their businesses and as online brokerages are looking to differentiate themselves. E*Trade, for example, last April began offering free high-speed Internet access via DSL to its Power E*Trade Platinum customers as a way to increase its share of the pie.
Last month, the Net brokerage industry swelled to a record $1 trillion in online accounts.
Despite Ameritrade's announcement, some analysts questioned its ability to attract additional customers.
"I doubt free Internet access will make you run out and sign up with Ameritrade. There are many ways to get free Internet access these days without opening an Ameritrade account," said Jason Lind, an analyst with US Bancorp Piper Jaffray.
Free ISPs are offered by everyone from Kmart and Seventeen magazine to major Web portals such as AltaVista, Lycos, Excite and Yahoo. More offbeat sources include going through the Democratic Party or "The Simpsons."
Ameritrade is offering the free ISP through a deal with 1stUp.com, which already provides free access for 70 partners including "The Simpsons," Yahoo, Excite and AltaVista.
Lind added that Ameritrade is one of the companies that seems to need this marketing tool the least based on its first-quarter results.
Last quarter, the company reported a 44.6 percent sequential jump in new accounts to bring its total to nearly 1 million customers.
"They had an amazing quarter," Lind said.
The company generated a net profit of 2 cents on revenues of $170 million, compared with a profit of 5 cents on revenues of $63.6 million a year ago.