Free ADSL data and ISPs making money

FNB Connect announced this week that it will be increasing the free monthly ADSL data to 5GB per user from Tuesday, 8 May 2012.

FNB is however not the only company offering free ADSL data bundles to consumers. Many Internet Service Providers (ISPs) including Afrihost, Vox Telecom and Cybersmart are providing free ADSL data to their customers.

FNB’s strategy is clearly to add value to their high-end banking clients by “making access to the internet and online banking platforms, either free or more affordable”.

Selling ADSL data at a profit is however the core business of many ISPs, raising the question of what the business model is behind the decision to give accounts away for free.

Vox Telecom CEO Douglas Reed explained that the idea behind their free ADSL data product is to provide a variety of value-added Internet services, for which one requires a broad section of the market to have access to the Internet.

Reed said that their strategy of providing free ADSL data is working well to achieve their goals.

Cybersmart MD Laurie Fialkov said that the “freemium” model is a well known internet strategy. “You give something free in the hope that you can sell the customer the premium product at a fee,” explained Fialkov.

Fialkov said that their model is based on customers purchasing an ADSL access line from them, which creates a viable business model for the company.

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Free ADSL data and ISPs making money