11 October 2000

Latino internet service provider Universal Online yesterday announced the closure of its unprofitable free access arm NetGratuita, only nine months after its launch.

UOL, a venture by publisher Abril and newspaper Folha de São, is Latin America’s biggest ISP, operating portals across South America as well as in Spain and among the US Hispanic community.

The end of NetGratuita may herald a backlash against free ISPs in Brazil’s rapidly growing web market. Another such service, Super 11, went out of business last month as revenue failed to meet expenditure. “The other [free] ISPs are sure to follow us”, predicts UOL’s director general Caio Tulio Costa.

Free ISPs have been popular in Brazil, and banks have helped fuel the expansion by offering the service to their customers. However, advertising and e-commerce revenue has not risen in tandem with web usage. The internet attracts only 1% of the country’s total adspend, while e-commerce will bring in only $300m this year.

News source: Financial Times