ISPs speed Web graphic delivery time-Dial-up accelerators work five times faster than regular dial-up connection

Call it dial-up on steroids.

Three of the country’s largest Internet service providers — EarthLink, NetZero and Juno — have launched performance-enhancing products designed to provide a faster dial-up experience.

By Eve Mitchell, BUSINESS WRITER Oakland Tribune

Called dial-up accelerators, the technology does not actually speed up the underlying 56 kilobits per second rate of the standard dial-up connection. Instead, it uses compression and cache-based technology to deliver text, graphics and photos on Web pages and Web-based e-mail up to five times faster than a regular dial-up connection.

Unlike the high-speed broadband access provided by DSL or cable connections, accelerators don’t speed downloads of text, video or music files. But it’s much cheaper than broadband — which can range about from $40 to $80 — depending on the connection speed and provider. And accelerators don’t require a special modem since they work with an existing dial-up connection.

NetZero HiSpeed and Juno SpeedBand cost $14.95 a month, $5 more than their $9.95 a month unlimited access products. EarthLink Plus goes for $28.95 — $7 more than its monthly $21.95 price for unlimited dial-up. All the accelerator products include unlimited dial up access.

NetZero HiSpeed and Juno SpeedBand, which was launched in April, have a promotional price of $9.95 for the first month for new and existing subscribers. EarthLink’s service, launched March 26, has a promotional price of $14.47 a month for first six months but only for new subscribers.

Accelerators use compression to shrink photo and graphic images on Web pages. The resulting images have less contrast but are delivered faster. Users can switch off the accelerator to view a page the way it would appear without compression. Accelerators also use caching technology, storing previously visited Web pages so they show up faster the more they are visited.

"It doesn’t actually make the (phone) line any faster," said Eric Siegel, principal Internet consultant at Keynote Systems, a Web performance management company based in San Mateo. "What it does do is increase the efficiency of using the line for certain types of (Internet activities), but not for everything. The bottom line is that the average Web user will see improvements" in everyday Web surfing.

"A lot of people don’t want to sit there and watch the (loading) bar fill," said Mark Goldston, chief executive officer of United Online Inc. based in Westlake Village (Los Angeles County). "It’s a very compelling product."

Goldston says many people tend to use the Internet to surf the Web and read e-mails and not for things such as downloading music and video files, and playing video games best suited to a broadband connection.

America Online and MSN do not offer dial-up accelerators.

"We are extremely happy with the early response. It is definitely exceeding our early expectations," said Mark Griffith, director of brand marketing at Atlanta-based EarthLink. "In some cases, some of our customers don’t have the ability to go to cable or DSL, depending on where they live."

United Online, which provides value-priced Internet service through NetZero, Juno and BlueLight, has a total of about five million subscribers nationwide.

About 2.18 million subscribers pay $9.95 a month for unlimited access offered by the three ISPs. Another 2.82 million subscribers get free access — limited to 10 hours a month, along with an ad-displaying banner bar — through NetZero and Juno. EarthLink has slightly more than 4 million paying dial-up subscribers, along with about 952,000 high-speed broadband subscribers via DSL, cable modem and satellite access.

Analyst Mark May said he thinks EarthLink and United Online are on the right track.

"It’s a very smart strategy for both of these companies," said May, vice president of media, cable and online service at investment banker Kaufman Bros.

May has a buy recommendation for AOL-Time Warner (AOL’s parent company), a buy recommendation for United Online and a hold recommendation for EarthLink.

"Before, (EarthLink and United Online) did not have a strategy for retaining customers that migrate to broadband. Now they do," he said. "This is a way they can up sell to an existing base. It helps them increase the profitability of subscribers."

May does not expect AOL or MSN to come up with dial-up accelerator products, noting that their strategies are more about providing online broadband content for existing broadband connections.

Kaufman Bros. does not have holdings in AOL-Time Warner, EarthLink, Microsoft (MSN’s parent company) or United Online.

Dial-up accelerators can be viable strategy in the short term for both EarthLink and United Online, said Dominic Ainscough, senior analyst in the consumer technologies and service section of Yankee Group.

"The window of opportunity for (ISPs offering dial-up accelerators) will diminish over time," said Ainscough.

Ainscough said price is the main reason that consumers have not yet switched to broadband. But in the next year or two, he expects broadband providers to offer lower-priced, slower speed, tiered pricing that will get closer to rates charged by AOL, EarthLink and MSN, which are considered premium dial-ups ISPs.

Of the 70 million American households with Internet access, about 54 million, or 77 percent of Web surfers, now use dial-up, according to Ainscough. About 16 million, or 23 percent of online households, have broadband access.

Ainscough is projecting that through 2007 the number of broadband subscribers will grow by 163 percent to slightly more than 40 million, while the number of dial-up subscribers will decrease by 24 percent to about 40 million.

Ainscough said that when the price of broadband gets lower, United Online’s lower price for faster dial-up puts it in a better long-term position to be successful than EarthLink Plus.

Goldston is optimistic about dial-up’s future. He cites a report by IDC, which projects the biggest growth in Internet subscribers through the year 2006 will come from households with annual incomes of less than $50,000. Goldston is banking on people in that income range opting for value-priced dial-up, even if broadband prices do drop.

"We’re exactly where we want to be," he said.

Eve Mitchell can be reached at (510) 208-6474 or [email protected]

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