CMGI-Backed Free ISP Goes All Out in LatAm

MIAMI (05/16/2000) - Gratis1 Inc., a free ISP (Internet service provider) backed by CMGI Inc., plans to be up and running in 10 to 12 countries in Latin America in the next four or five months, and then it will set its sights on the U.S. and Europe, according to the company's top executive.

Although many ISPs offer both free and paid service, Gratis1 will only offer free access, said Alejandro Cosentino, the company's chief executive officer, in an interview on Friday at the Latin American Internet and Technology in the 21st Century conference here.

"We don't believe in the hybrid model. We were born to provide free access.

That's our mission," he said.

The company plans to stay afloat by selling advertising on its companion portal (http://www.gratis1.com), whose content is being provided and managed by StarMedia Network Inc., which owns part of Gratis1. StarMedia's sales force is also in charge of selling the portal's ads. StarMedia, the first Latin America-focused Internet company to go public, runs a variety of Spanish- and Portuguese-language Web sites and portals.

"The company will be profitable. That's a given," he said, adding that the company's owners made it clear from the beginning that they're not interested in backing a money-losing operation.

The online advertising market in Latin America is estimated at US$150 million this year by Salomon Smith Barney Inc. Gratis1 believes online ad spending in Latin America will continue to increase robustly because more and more companies in the region are finding they must advertise on the Web in order to remain competitive, Cosentino said.

Gratis1, whose other owners are Chase Capital Partners, Flatiron Partners and 1st Up.com Corp., began offering free access to the Internet in April in the region's three largest markets -- Argentina, México and Brazil -- but Cosentino declined to disclose how many users the company has signed up so far. Within the next three weeks, it will begin operating in Chile, Uruguay and Colombia, he added.

The company also has partnered with PSINet Inc., which is selling Gratis1 wholesale Internet connectivity.

Interestingly, Gratis1 is not limiting itself to individual users, but rather is also approaching corporations interested in providing free dial-up Internet access to its employees and customers, Cosentino said, adding that the company recently closed a deal with a Mexican bank and a large company in Argentina with 6,000 employees.

The company offers connection speeds of up to 52K-bps (bits per second) and allows users to connect for an unlimited amount of time. Every subscriber gets an e-mail account and 25M bytes of space for personal Web pages. Gratis1 has exclusive rights in Latin America to 1stUp.com's navigation software, according to the official.

Other companies offering free Internet access in the region include the U.S.-based IFX Corp., Spain's Terra Networks SA and Brazil's UOL Inc.

Latin America's population is estimated at about 500 million, but at year-end 1999 there were only 10.6 million people with Internet access in the region -- about 2 percent of the region's population -- according to estimates from Jupiter Communications Inc. in New York. There should be about 66.6 million Internet users in Latin America by 2005, according to Jupiter.

Gratis1, based in Buenos Aires, Argentina, can be reached at +1-54-11-4341-4572 or at http://www.gratis1.com/.