SAN FRANCISCO — BlueLight.com, Kmart's online alter ego, took over a failed business partner that provided free Internet service to millions of computer users, preserving a vital customer link in the heart of the holiday shopping season.
The move assures that about 6 million people who surf the Web through a network created by Spinway Inc., based in Sunnyvale, Calif., will continue to have free Internet access at least through the year's end.
After abruptly closing its doors Friday and laying off the last of its 100 employees, Spinway appeared poised to pull the plug on its service until BlueLight stepped in Monday. About 30 Spinway workers will help run the Internet service for BlueLight.
San Francisco-based BlueLight plans to evaluate whether it should charge for the Spinway service early next year, said company spokesman Dave Karraker. "For now, we are viewing this as a necessary marketing expense to reach customers."
BlueLight didn't divulge financial terms of the takeover, announced on Monday, but the company will probably incur its biggest expense running a network that provides dial-up access to the Internet in 5,000 cities. Spinway is the latest in a line of free Internet service providers, or ISPs, to run into trouble amid rapid growth.
Founded in 1999, Spinway provided free Internet access through partnerships forged with BlueLight, Costco, Hewlett-Packard, Ace Hardware's OurHouse.com, Spiegel Catalog, Barnesandnoble.com and NBCi.com.
Spinway viewed its alliances with retailers like BlueLight and Ace Hardware as a way to reach budget-conscious households that remained off-line to avoid the monthly bill, roughly $20, typically charged by Internet service providers, or ISPs.
Since its launch last year by Kmart, BlueLight has accounted for most of Spinway's traffic. About 5.2 million people signed up for Spinway's free Internet service offered through BlueLight.
BlueLight offered to continue providing free Internet service to customers at Spinway's other partners, if the businesses paid a fee. Costco, Spiegel and Barnesandnoble.com, accepted BlueLight's offer, Karraker said.