It's hard to make a buck offering free Internet access. Just ask j3 Communications.
In less than a month, the start-up has gone from offering free Internet access to charging up to $19.95 a month--the going rate charged by most ISPs.
On March 6, j3 said it would offer unlimited Internet access nationwide--providing customers signed up with the company as their long distance telephone carrier. j3 has now pulled the plug on the offer that some of its customers are calling "too good to be true" because it was uneconomical.
The offer appeared to be the latest example of bundling Net access with long distance phone service, the kind of "one-stop shopping" for telecommunications products that has come as a byproduct of telephone deregulation.
But j3's plight shows that executing such plans are sometimes easier said than done. When it launched the original plan, j3 said it would offer Net access at 28.8 kbps to 350 cities worldwide and had the capacity to handle up to 600,000 customers.
After the company's new president, Jack Feathers, joined j3 on March 19, he soon sent out a letter to those signed up for unlimited Net access saying they would still get a free ride, but new customers wouldn't.
"Frankly we weren't prepared for the interest," he wrote.
"Effective March 31, 1997, a new pricing plan will go into effect. New customers [who] have $100 per month of long distance usage will continue to receive free unlimited access," Feathers said. "Customers who have from $50 to $99.99 per month of long distance usage will be charged $9.95 per month for unlimited access. Those who have zero to $49.99 in long distance usage will be charged $19.95 per month."
The new plan offers a 14-cent-per-minute long distance rate and 20 percent off all international calls for customers who want to give up free Net access to participate in the tiered pricing system.
"The initial program was kind of a pilot program to test the waters," Feathers said in an interview today. "Due to the response we got, we needed to charge and offer a lot better customer service plan."
He wouldn't say how many customers had signed up for the free Net access offer. j3's Web site is still advertising "Internet access is completely unlimited--you pay nothing," but if visitors try to sign up, they are sent to a dead page.
"You can't sign on," Feathers said. "We're in the construction process putting the new information about rates on the site."
Still, some of j3's first takers are frustrated.
"Well the 'free lunch' lasted less than one month," a j3 customer said. "It doesn't effect me, but I'm not very confident that the original j3 'unlimited access' plan will last much longer [even for existing customers]. What's that old saying? 'If it sounds to good to be true...'"
Internet editor Jeff Pelline contributed to this report.