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The End of Free E-Mail?

Free e-mail may soon transform itself into "fee e-mail." Several major Internet portals like Yahoo and Hotmail, which have long subsidized e-mail for consumers, are now planning to charge annually.

E-mail is a lot like telephone service in that the value of the technology increases as more and more people get it.

Syracuse University Information Studies professor Rolf Wigand says offering e-mail for free prompted hundreds of people to try it, which then caused thousands of their friends and acquaintances to join in.

He says today millions of consumers, himself included, feel they can not live without e-mail. "Any time you give consumers a chance to try something at no cost, little risk, it's certainly a factor why a particular practice may take off," he explains. "Today if my boss told me we had to cut costs, I would say take my phone, but do not take my e-mail. It has become so crucial in terms of what I get done."

But as e-mail has multiplied in popularity, Rolf Wigand notes, the costs of providing it have multiplied too. "A few years ago Microsoft bought Hotmail," he said. "At that time, Hotmail had 8.5 million customers. Today Hotmail has 110 million customers, and industry analysts think it costs Microsoft roughly $1 a year to maintain each account, so just to maintain the account we are talking about $110 million.

Communications technology specialist David Ferris says Internet service providers first tried coming up with the money through advertising, then by charging for other services. Neither tactic has worked.

Essentially, he says, company shareholders have been subsidizing free e-mail. "What is happening now is that the technology industry has had a year of shareholders rightly putting pressure on their management saying: 'Look, we need you to generate some profits out of your operations,'" notes Mr. Ferris. "And that has caused service providers to look at ways of weaning people off free service for fee service."

David Ferris says charging for e-mail should not diminish its popularity, because the charges will be small and because so many have become addicted to e-mail.

Indeed, he says, "fee" mail might very well inspire new technological breakthroughs. "If there are ways to make money, then you are going to have all sorts of innovative start-ups trying to do new things, and people will invest in those things.

"On the other hand, David Ferris adds, free Internet service has enabled many tiny businesses to thrive with very little overhead expense.