United Online Offers Long Distance

NetZero is giving away a free month of long-distance telephone service to lure customers to its new offering. It would seem to be a win-win situation for parent United Online.

by Jim Wagner Managing Editor, ISP-Lists [June 7, 2002]

United Online is retooling its image as a pure-play Internet service provider (ISP) with the announcement Thursday to offer long-distance telephone service (of a sort) nationwide through its NetZero brand.

Users will have the choice of two plans: the "Unlimited 0 Cent Per Minute Plan" offering users unlimited calling for $29.95 a month, or the "1 Cent Per Minute Plan," which offers users up to 500 minutes for one cent per minute plus $9.95 a month. The service is made possible by CNM Network

The ISP is looking decidedly carrier-like, adding voice service to its portfolio, though the company will never be confused with Verizon Communications or WorldCom.

Brian Woods, United Online executive vice president and chief marketing officer, said the service is a convenient alternative to the many calling plans out there today.

He said the idea for offering long-distance service comes from customer feedback polls conducted by his company's cyber-market division. The fact that all billing and actual service is handled through CNM translates to margin profits for each NetZero long-distance customer signed up, with virtually zero cost to the ISP itself.

"We can't get hurt (by this deal)," Woods said. "Other than the time spent to sign up the consumer, we haven't spent any money on it. I also think it fits very well with our position as a value-price ISP. We're trying to leverage our position as a value-price provider and extend it into other services that our users might have for connections."

The service, available through a contract with CNM Network, isn't for everyone, however. Much like a dial-up Internet connection, users need to access a call-in POP and then enter a PIN to access the nationwide network. If a customer is outside the local calling area of that POP, they're going to pay a long-distance fee to make use of the plan.

CNM's telephone network, Woods said, is comparable to the POP footprint at United Online, including all the "NFL cities" as well as many of the second-tier markets.

Since billing is handled at the CNM end, United Online customers will get two separate bills for the service. According to Charles Rice, CNM Network chairman, president and chief executive officer, that's not an onerous detail with the company's different payment options.

"CNM empowers consumers by providing superior long distance services with the flexibility and control of real-time online billing and account management," he said.

United Online, the marriage of NetZero and Juno Online, has spent the past year freeing itself from its roots and image as a free ISP. In the process of shoring up the financial bottom line, executives have been looking for other offerings to diversify its revenue streams.

On Monday, the company announced the availability of Juno cable broadband in two U.S. cities, in a deal with Comcast similar to the one struck with CNM Thursday. Comcast will provide the billing and service while Juno offers its name brand.

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