A Farewell to Fire

FreeDSL, the only high-speed free Internet option in the U.S., is about to shut down, according to a statement by its owners Wednesday night. Most staff members have been laid off.

by Jim Wagner of internetnews.com [March 1, 2001]

Winfire, Inc., the digital subscriber line provider arm of Steel Holdings, Inc., is trying to sell off up to 100 percent of its holdings and laid off most of its staff of around 300 employees Tuesday morning.

Many customers are still able to connect to the Internet with their DSL connection, but others remain offline.

Steel Holdings, created late last year as a parent company to Winfire and Octive Technology, is the brainchild of admen Chad and Ryan Steelberg. The Steelberg brothers founded AdForce in 1995, which was later sold to CMGI for $500 million.

Inspired by NetZero
Ryan Steelberg got the idea for FreeDSL while working as director of marketing for NetZero, Inc., a free ISP for dial up Internet service. His brother, Chad, went on to create a software operating support system for DSL self-installs, which later translated into the formation of Octive Technologies.

It seems Octive is all that will remain of Steel Holdings. Shutting down FreeDSL displaces more than 57,000 customers nationwide.

"As Winfire was our largest operating subsidiary, a majority of the staff will be released," Chad Steelberg said in a statement. "Focusing our efforts on the Octive company and its proprietary technologies will enable us to better service our ISP and last-mile customers."

Shut down
That comes as small solace to Winfire's customers, many who were shut down Monday with no word of their disconnection and customer service calls unanswered. Email was rejected and sent back to the user.

A voice message at its (877) 993-7333 support number informs customers an email will be sent in the next couple of days with further instructions for switching service.

According to an anonymous former employee at Winfire, posting on popular DSL consumer forum DSLReports.com, the news came as a surprise to employees and customers alike.

"Winfire closed down shop at 3:15 p.m. on Tuesday; on Monday all (the) temp employees were recalled by their agency and the following day rumors abounded about how we were closing shop," said 'WinFIRED.' "Much to my chagrin, I received a phone call that we were to report for our final paychecks in the afternoon and that Winfire ... ceased operation."

FreeDSL was a rarity in the Internet industry. While many companies were clamoring to start free dial up ISPs in 1999 and 2000, Winfire started registering millions of users who wanted free high-speed Internet access, with the attendant ad banner toolbar.

As the service became available in a city, registered users, on a first-come, first-served basis were sent a DSL self-install kit for connection.

The DSL service was tiered in the same fashion as Juno Online Services, Inc., the number three dial up ISP in the nation, which brings customers in with the promise of free Internet, then gets them to upgrade to its paid premium services.

Fire and Earth
Rumors abound on a likely Winfire buyer. EarthLink, Inc., is considered a possible buyer, to bolster its present DSL platform. EarthLink also has a deal with AOL Time Warner to provide high-speed cable Internet service on the new company's cable network.

It's unlikely data competitive local exchange carriers (DLECs) like Covad Communications Group and NorthPoint Communications will attempt to assimilate a company with about 57,000 customers. Many DLECs are having provisioning problems of their own after taking control of lines lost by defaulting broadband ISPs.

It's uncertain whether FreeDSL customers would translate to paying customers on another service. Winfire's most popular service features 144Kbps download service for $9.95 a month, without the ad banner toolbar.

Many of these customers aren't willing to spend the $40-$50 fees normally charged for DSL service.

—End