StarMedia creates free Internet access service in Latin America

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MIAMI--Internet media company StarMedia Network announced it hascreated a free ISP service with partners, GMGI Inc., Chase Capital Partners and Flatiron Partners.

The ISP, called Gratis1 (free-1 or free-one), will offer free access withno registration fees, subscription fees or computer purchase requirements.It will derive its revenue from highly targeted advertising (an ad barwill stay on screen no matter where the Internet customer goes). Ad saleswill be handled by the existing StarMedia sales force. The sales team hasyet to approach advertisers about the new service.

Gratis1 emphasizes that personal information about its users will neverbe divulged or sold. Although StarMedia is an investor, the new companywill be run as a separate operation, headed by CEO Alejandro Cosentino.StarMedia Chairman-CEO Fernando Espuelas will sit on the board, as willexecutives from the other partners.

Executives declined to comment on the cost of the initial investment, butsaid they planned to spend $200 million during the next three years inareas such as technology, telecommunications and advertising.

The service is slated to launch first in Sao Paolo in early April, beforerolling out to the rest of Brazil, and to Mexico and Argentina. It eventually will cover all of Latin America.

Mr. Cosentino said the company's initial marketing strategy will involvedistributing the software to Latin American consumers who currently haveInternet access, but he declined to comment further on those plans. Evenwith free ISP service, the high costs of telephone connections throughoutLatin America remain an impediment for many Latin Americans to get onlineor to stay online for extended periods of time.

Internet usage is growing in Latin America, with 15 million users in theregion, according to a study by Audits & Survey Worldwide.

Copyright February 2000, Crain Communications Inc.

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