Free access hits AOL stocks

Various US service providers have followed Britain's lead in offering fee-free Internet access. America Online's shares have fallen by nearly 50 per cent since April, in part because of fears that free and cut-rate services might force it to cut fees that made up 70 per cent of its revenue last year.

Free access has caught on in a big way here. NetZero, the largest free provider, has more than 1.7 million registered users. Microsoft has hinted that it may cut MSN access fees to attract users.

But some analysts say AOL has little to fear because the free-access business model is flawed, relying too much on future advertising revenue.

AOL president Bob Pittman, whose 18 million users pay $21.95 monthly, said: "If we didn't have those fees, AOL would lose money." (NB: In the UK, which has different costs, AOL has started a free service called Netscape Online).

Silicon Valley's most secretive start-up, Transmeta, may shed light on its business at the Comdex trade fair in November, says one of its famous employees. "I think I can now tell you when I will be able to tell you," Linus Torvalds said at a recent seminar. "The company has considered saying something at Comdex, or at least saying when we will announce something."

Others known to be involved with Transmeta include Microsoft's co-founder Paul Allen and chief executive David Ditzel. All have been careful not to reveal what the company is up to. The combination of Allen's money, Torvalds know-how, the secrecy and this year's Linux hype has fuelled speculation.

Best guesses are that the company is working on either a revolutionary high-speed computer chip, or on software improving the way chips work, or both.