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Free Internet - For A Price

Leading Internet search portal AltaVista.com is now offering consumers free online access, providing an alternative to typical $20-per-month charges for unlimited use of the World Wide Web.

AltaVista, the No. 10 destination on the Web, on Thursday became the first brand-name Internet company to offer free access, joining smaller, lesser-known companies that provide free service by bombarding users with advertisements.

AltaVista thinks it can lure consumers away from leading Internet service provider America Online - which charges $21.95 a month for unlimited access - and other top providers such as Microsoft's MSN, EarthLink and Mindspring.

"Why continue to pay $240 a year when you can get a perfectly good service for free that meets your needs?" said Charles Rashall, vice president of sales and marketing at AltaVista in Palo Alto.

To sign up for AltaVista FreeAccess, users must provide the company with demographic information including their age, sex and ZIP code, as well as their online shopping habits and favorite Web sites. The information will be used to customize ads sent to users.

Critics argue that free Internet access will result in poorer customer service. They also say consumers dislike an endless stream of ads on their computer screen - in addition to those already on many Web pages.

"With free access, you still have to pay in the sense that you are forced to look at advertisements," said Hany Nada, a financial analyst at U.S. Bancorp Piper Jaffray.

"If I could pay an extra 10 bucks a month to avoid watching commercials on TV, then I would," he said.

Although free Internet access is growing increasingly popular in Europe, only 1 million of the 63 million people online in the United States dial in for free. An early pioneer in the free Internet arena, Bigger.net, recently went out of business.

But AltaVista says it is in a different position.

"We are not one of these little startups with zero brand recognition," Rashall said. "We are a brand that people know and trust."

Compaq Computer Corp., which owned AltaVista, sold it to the Andover, Mass.-based Internet investment firm CMGI Inc. in June for $2.5 billion. The deal between Compaq, based in Houston, and CMGI has not yet closed.

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