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I think free hosts still have their place. For people just wanting to try out new things for sites, people experimenting, non-profit organisations etc. they are excellent.
I started out on a Free Host and it gave me the chance to experiment and build up a site without having to worry about meeting bills. I don't think I lost much traffic or money though it, and the host I used was relatively good. Eventually I paid for hosting, but only once I knew I could cover the costs.
Although free hosting isn't much use for business sites, it's still excellent for those who aren't too bothered about the money.
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