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Internet

iVillage to offer low-cost ISP

The company plans to offer Internet access service to offset a serious drought in advertising revenue. With broadband all the rage, will surfers bite?

iVillage on Thursday unveiled a low-cost Internet access service, in a move to bolster flagging revenue amid a dismal advertising market.

The New York-based company, which operates a network of women-centric Web sites, launched iVillageAccess, a branded dial-up access service. The service costs $17.95 per month or is available for $15.95 a month with a one-year subscription; it includes five e-mail addresses, spam-filtering features and a personalized home page.

To attract subscribers, iVillage plans to help people switch from major service providers such as America Online and MSN. The company plans to team with TrueSwitch to help members switch from another ISP, with e-mail forwarding and other automatic services.

The strategy of offering Internet service with a Web site is a throwback to the booming dot-com days, when Web operators such as AltaVista, Yahoo and even giant retailer Kmart built ISPs around their sites. Few, however, were successful.

Some early ventures gave Net access away for free and supported their business with advertisements. Yet as the ad market weakened, these services couldn't support themselves. Tougher competition from giants such as AOL, MSN and EarthLink pushed many smaller ISPs out of business.

Despite the past, iVillage says it sees an opening in the marketplace for a low-cost ISP--especially with 20 million monthly visitors.

"Our visitors have been quite vocal about their disappointment and frustration with their current ISPs; they want price, simplicity and quality," iVillage CEO Douglas McCormick said in a statement.

iVillage is targeting dial-up subscribers, however, at a time when large Web services are looking to broadband access services as the next wave of Web access. Yahoo recently teamed with SBC Communications for DSL (digital subscriber line) services, while AOL 8.0, America Online's latest Web access software, contains advanced features that work well with broadband. Separately, MSN plans to unveil its next-generation software next week.

Analysts said that the service may appeal to a price-sensitive public, but iVillage has an uphill battle in winning customers.

"The problem is lots of people have tried this game only to discover it's really not a great business to be in," said Michael Gartenberg, research director at Jupiter Research.

"It's an expensive business with thin margins and heavy competition from EarthLink, AOL and MSN, backed by hundreds of millions of dollars in advertising. It's hard to see how they can make inroads to that market."

The ISP plans are part of iVillage's push toward paid services, a strategy to offset losses from a prolonged drought in advertising sales. The company reported a slimmer second-quarter net loss and some revenue growth, but it has continued to struggle.

The company has until Dec. 16 to regain compliance with Nasdaq listing requirements after shares fell below the minimum price of $1 as required by the exchange.

The company has partnered with Canadian IP Applications to launch the Internet access service, available to about 90 percent of U.S. subscribers.