Is "Free" Internet Back?

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Dial-up Internet access may be as fashionable as a double-knit suit, but the company that started the free dial-up craze says it will do the same thing for a wireless generation hooked on broadband speed. NetZero, the Internet services brand owned by United Online (Nasdaq: UNTD  ) , announced Monday it will provide free wireless 4G service on a no-contract basis.

Free? Yes, but …
Willie Mays never made catches as big as those connected with NetZero's "free" offer. First, a user will have to buy some hardware from NetZero: $50 for a USB wireless dongle or $100 for a WiFi hotspot device.

The free service, which is available for only one year, allots a mere 200 megabytes of data each month. If one uses more than that, NetZero terminates access for the rest of the month -- that is, unless the user pays for an upgraded plan. But once the user upgrades to a paid plan, well, there's no returning to the free plan.

The upgrade to 500 megabytes per month will cost $10, 1GB goes for $20, 2GB for $35, and 4GB for $50. For comparison, Verizon (NYSE: VZ  ) offers no-contract mobile broadband plans with 2GB for $30, and 5GB for $50. AT&T's (NYSE: T  ) least-expensive data plan is for tablets only, which it offers at $15 a month for 250 megabytes.

Faux G
It turns out that NetZero does not have its own mobile broadband network. Clearwire (Nasdaq: CLWR  ) is renting its WiMAX 4G network to NetZero, but of all the broadband technologies purported to be "4G," WiMAX is the slowest. Sprint Nextel (NYSE: S  ) partnered with Clearwire to be the first mobile carrier to offer 4G service (using WiMAX) but other carriers opted not to go that 4G route, instead holding out for the much faster LTE 4G technology.

Clearwire is no longer putting its resources into WiMAX. It is now working on building out an LTE network. But money has been tight for Clearwire in its quest to modernize, so having NetZero become a wholesale customer -- especially now that Comcast has aligned itself with Verizon as a reseller of that carrier's wireless services.

NetZero sum game
There are just too many "gotchas" in NetZero's offering to make it worthwhile for most mobile broadband users. But this offer does for NetZero what it did for the company back in 1998, when it first started offering free dial-up: It puts the brand in the spotlight -- and reminds people that United Online's NetZero is still around.

One thing that's still around for United Online: its generous 8% dividend. For a list of nine stocks that can provide investors with solid returns, click here for this Motley Fool free report!

Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 20, 2012, at 10:52 AM, motleyinfo7 wrote:

    Well as far as phone calls, it's almost free now with Simple Mobile ( ) giving customers unlimited talk, text, web for just $40 a month and even on the iPhone. Internet should be free and should be supported via advertisements similar to an idea that was floated initially.

  • Report this Comment On March 20, 2012, at 1:08 PM, spokanimal wrote:

    The netzero contract with Clearwire covers multiple years. That means that netzero will be able to offer users an upgrade to LTE in geographies where it becomes available.

    In 2013, those LTE connections will be "LTE-Advanced" which will run extremely fast on Clearwire's fat spectrum commitments.

    So... netzero could offer WiMax running at half the speed of the bigs for less money...

    ... or they could offer a TD-LTE modem for the same price as the bigs that runs LTE 10 times FASTER than the bigs.

    The future belongs to those who don't live in the past, Dan.


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