Dial-around days: Companies offer 6.5cents-per-minute Internet access

US WATS and BAMnet last week launched a dial-around Internet access number that lets customers in rural areas access the Internet at affordable rates.

Catering to the needs of consumers who don't have local access to ISP points of presence, the companies introduced 10-10-2000. The access code will connect users to BAMnet Internet for 6.5cents per minute via the US WATS network, currently built out on the East Coast from Maine to northern Virginia and on the West Coast in California.

As US WATS expands its network, the service will be available nationwide using a calling-card style access number. Charges are added to a customer's local phone bill.

The companies' strategy centers around offering service in areas other ISPs don't consider economically worthy of a POP.

"We have a few people living in Maine and dialing New Hampshire for Internet access because there's no local access in the area," said Michael Meighan, chairman and CEO of BAMnet.

In such cases, a toll charge of 22cents per minute is added to a $21.95 per month access charge for the local ISP. "It's almost double paying," he said. High costs and low revenue potential keep ISPs from locating there, he added.

The BAMnet and US WATS dial-around service, with a lower cost structure, generates revenue from every user and allows the companies to venture into rural locations. The service eliminates monthly access fees, passwords and access names. "There are no hidden charges, no hidden fees - it's very straightforward," Meighan said.

Originally crafted for rural users, the service is quickly finding a wider market. Some customers are using it as a backup to their regular Internet service - such as signing on to make last-minute stock trades when they get a busy signal through their provider, said David Hurwitz, president and CEO of US WATS.

Users with unlimited access to the Internet at work are using the access numbers for their limited home connection needs instead of opening a separate account, Meighan said.

Under these usage patterns, BAMnet hopes to attract first-time Internet users but also likely will draw customers who currently are getting service from other ISPs.

The dial-around number may steal a few customers from local ISPs - many owned by local telcos, said Gerri Arnason, vice president of business and technology for the National Telephone Cooperative Association. But, he added, "I don't see a serious threat from these type of services. Traditionally our companies compete on service. They are well-established in their communities, and their communities are used to a level of service that I do not think these 10-10-2000 folks could provide."

The technical support provided by BAMnet and the length of time customers are put on hold for customer service issues are things that will be considered in the long run, he said.

The service also may come up short because it lacks some of the perks, such as centralized e-mail, instant messaging and address books, which make it hard for many customers to break away from America Online and other big ISPs. Instead of offering its own e-mail, BAMnet refers users to Yahoo!, Microsoft's Hotmail or Excite.

BAMnet and US WATS have an interesting strategy, Arnason said, but, "there are some folks getting a little leery of signing over all their personal information to these huge Internet sites for fear of privacy and marketing techniques."