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Start-up’s software speeds dial-up Internet service

Internet users around the country are clamoring for faster connection speeds. Some are laying
down $40 or more a month for faster access, while others are hesitant to spend so much.

Steve Kirsch says he has a better, cheaper way.

By Jon Fortt
Mercury News

Kirsch, a longtime Silicon Valley entrepreneur, has created technology businesses before; he sold
Frame Technologies to Adobe Systems, and later sold his Infoseek search engine to Walt Disney.
He has made millions of dollars at it, and he’s still in the game.

Kirsch’s latest company, Propel, sells a service that makes a PC’s dial-up Internet account perform
like a high-speed broadband connection. Kirsch is chief executive of the San Jose company.

“Broadband is growing, but it is still only around 15 million U.S. households vs. 60 million dial-up
subscribers,” said Rob Lancaster, analyst with Yankee Group. “The major reason people are
going to broadband is because of speed, but the major reason people are not going to it is the
cost.”

Propel’s service, called Propel Accelerator, requires only a simple software download. It costs
about $5 a month.

“Now dial-ups can have, for Web browsing, the same experience as broadband users. That’s
huge,” Kirsch said.

So huge that a lot of people don’t believe it. The lure of turning a dial-up connection into
broadband is like turning lead into gold, and companies that claim to achieve this feat are
generally considered to be frauds. Such companies send out unsolicited e-mails with subject lines
like, “Boost your Internet speed!” and “Your connection is not optimized.” Their software
delivers little consistent benefit.

Propel Accelerator, on the other hand, works. In a reporter’s test with an old laptop, a dial-up
connection and a stopwatch, Propel tripled the apparent connection speed.

The concept behind the Propel software is this: Using downloaded software and Propel’s own
servers, Propel Accelerator helps a PC to store snippets of Web pages, and quickly recall those
snippets when they are needed again. Propel does not actually speed up the connection, it just
helps by reducing the amount of information the computer must receive over the Internet.

The service does not speed downloads or streaming media, so it does nothing to help users who
want to grab songs or swap files. High-speed Internet methods such as DSL and cable modems
cost in a month nearly what Propel costs in a year. Propel offers a one-week free trial, available at
http://www.propel.com

Kirsch said 10,000 computers have tried the software in the past month, and the company has
about 1,000 paying customers. He said companies that provide Internet service have expressed
interest in incorporating Propel Accelerator into their software.

Propel needs to sign up about 100,000 users before the company breaks even, Kirsch said, so its
strategy is to convince ISPs to sign on to the service.

“If you try to go direct, the costs are much higher to sign up a user,” Kirsch said. “So it’s
actually more profitable for us to sign up with the ISPs.”

Nonetheless, there are a few barriers to Propel’s success.

Internet service providers know that consumers don’t want to spend $40 or more a month for
Internet access, and they have already begun to respond. Some are beginning to introduce
“broadband lite” services, which are medium-speed connections for $25 to $35.

Those ISPs might not want to adopt Propel if it will eat away at their broadband business.

“It could be a factor. I don’t necessarily think it’s going to be the end of the world for Propel,”
said Lancaster. “Dial-up is still going to be a major part of the Internet world well into the end of
this decade. We still forecast over 40 million U.S. dial-up households at the end of 2007.”

Kirsch, who has been in Silicon Valley since 1980, seems prepared to ride through any storms
ahead.

He said Propel recently finished raising a $2 million round of venture capital financing, and Kirsch
said “times are worse now than I have ever seen them in my career, in terms of getting
investment capital.”

Propel has raised nearly $50 million altogether, and about half of it has come from Kirsch himself.
“I’m not one of those CEOs who’s going to leave,” he said. “I’m committed.”

http://www.bayarea.com/mld/bayarea/business/3900217.htm

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