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One company that rejoiced at Carphone Warehouse's recent free broadband launch is 121Media, a recently AIM-listed company that reckons it has the revenue model ISPs will now need to survive.
121Media (OTO) has developed a piece of technology that sits on the server of an internet service provider (ISP) and enables usage data to be collected and analysed on the fly for every one of the ISP's customers. The data is anonymous, but tells the system exactly which web pages the user has viewed and what they have done on those pages, so that an advert can be served to them as they wait for the next page to load, which is precisely targeted to their usage patterns.
To date, ISPs have tended not to serve adverts to their customers, who are already bombarded with ads on individual web pages. However, according to 121Media's chief executive Kent Ertugrul, the rapid commoditisation of broadband provision, which has just been accelerated by Carphone's (CPW) announcement of 'free broadband for life', will leave ISPs desperately looking for a new revenue model.
In the US, he said broadband is currently down to about $13 (£7.30) a month, and in cities such as San Francisco, they are currently rolling out free wireless broadband.
121Media started out providing its software to enable advertising on desktop PCs. To date, all of its revenues have been from this. However a year or so ago, it saw the opportunity to redevelop its software for servers, in order to target the ISP market.
Consequently, in the year to December, it has chalked up some $3.3 million of operating losses on turnover up 25% at $5.2 million.
The company floated on AIM in December 2004 and in February this year raised $4.2 million to help it 'capitalise' on the ISP opportunity.
So far, 121Media has signed up partnerships with what it describes as ten 'entities', including two municipal wireless projects. These represent around a million internet users. However Ertugrul said the company is in talks with all of the major US ISPs, which between them represent some 70 million internet users. He will also be in the UK in the next couple of weeks talking to all of the major players here, including Carphone.