Faster Dial-Up Is Latest Maneuver By United Online
By MICHAEL THURESSON
Staff Reporter
United Online Inc. believes it has an answer for its thrifty Internet service customers who crave faster downloads but don’t want to pay the price of broadband. The problem: Its competitors have come up with similar plans.
This month, the Westlake Village-based company launched new, faster dial-up services. Priced at $14.95 a month, Juno Speedband and NetZero HiSpeed take advantage of various technologies to speed transmission times by up to five times without requiring new equipment. The basic, discount services that NetZero and Juno offer cost $9.95 a month.
The technology adds speed by compressing Internet text and graphics, making it easier to download to users’ computers. It also stores, or caches, portions of Web sites on users’ computers. When a site is visited, less data has to be downloaded.
A United Online competitor, Atlanta-based EarthLink Inc., announced its own enhanced dial-up service in March. Users pay $28.95 per month for EarthLink Plus, a $7 dollar increase from the regular monthly subscription.
Others haven’t followed suit, but there’s nothing to prevent them. United Online licensed its compression and caching technology from Slipstream Data Inc., a Canadian company, while EarthLink went with San Jose-based Propel Software Corp.
Faster dial-up is an appealing choice for Internet users not now purchasing broadband services such as DSL and cable, which typically cost between $40 and $50 a month.
“Broadband is available in over 80 percent of U.S. homes, but at its current prices it’s not compelling enough. These dial-up technologies are an interim solution,” said Michael Greeson, senior broadband analyst at Parks Associates, a technology research firm in Dallas.
United Online’s cheapest services have made inroads against its biggest target, AOL-Time Warner Inc.’s AOL division. With 2.2 million subscribers, United Online expects to continue doing so with the faster offering.
“Internet service is a commodity, and we are the low cost provider. There is no great pressure on the broadband providers to lower their prices,” said Chief Executive Mark Goldston.
He noted that EarthLink has spent heavily on its DSL offering, without a financial payback. EarthLink has 779,000 DSL subscribers, compared to 4 million dial-up users, said an EarthLink spokesman.
Steve Kirsch, chief executive of Propel, said his company and Slipstream use different, patent-pending algorithms for their technology and that United Online tested both products before deciding upon Slipstream.
United Online and Slipstream would not comment on the terms of their relationship.
There are still signs that broadband will dominate the market in a few years. While the total U.S. dial-up market is estimated to be 50 million, the percentage of homes using broadband access is expected to rise to 70 percent by 2008, from about 27 percent currently, according to Strategy Analytics. Analysts said Yahoo Inc., AOL, and Microsoft Corp.’s MSN service are driving broadband use into the mainstream through content such as streaming video.
Neither United Online or EarthLink’s new dial-up services can compress streaming video. This limitation may be a reason that EarthLink is betting on broadband. The company plans on getting users of its new dial-up service to switch to its DSL service eventually, said Mark Griffith, director of brand marketing at EarthLink.
