Can paid services exist in landscape of free services: Beta 1 post

We will have to go deeper into the question when can paid products or services can survive if equivalent free services are available. We will keep on posting on this subject till we find an acceptable answer. Our answers may lead to business model expansion

We know from our experience
a. Operating System: Microsoft has managed to keep at bay all free OS's
b. Water: Bottled water sells even if free water is alternately available
c. Utilities & Sops: Free utilities like free electricity supply, discounted rice has existed in India, yet people prefer paid versions
d. Hotels: Dharamshalas and Five Star Hotels both exist in same cities, yet 5 star hotels not only survive, but sometimes are fully booked.
e. Transportation: Taxies and Limousines survive even though free/near free public transportation exists.
f. Dating Services: Premium dating services do well even though free dating services are available
i. Internet Connectivity: Even though free wi-fi spots exists, paid internet connectivity survives

On the other hand there are evidences to the contrary
a. Browsers: Netscape got eliminated when Internet Explorer was offered free
b. Emails: No paid email to general users services survived in post Hotmail. Although paid corporate email services still exist
c. Internet searching, Blogging, Information services have remained free right since start, and its inconceivable that a paid version would ever have a chance

So we need to know
a. Under what circumstances free would tramp paid.
b. Can we evolve a parameter based qualitative and if possible quantitative model to evaluate survivability of paid versus free
c. Is it possible that paid will have advantage over free..How and when

Rohit