Recession Driving Back Consumers to Dial-Up

Broadband may have taken internet access to the next level, but during a recession, many consumers are finding it hard to justify the need to pay more money for faster Internet speed.

According to Ethan Horowitz of the Chicago Tribune.com, the down economy is making people ditch cable Internet and go back to slow but inexpensive dial-up connection.

While no exact figures are available yet, Horowitz said signs point to dial-up as becoming the preferred choice (again) for cost-conscious consumers.

United Online, which owns dial-up providers NetZero and Juno, for instance, reported that in the fourth quarter of 2008, an all-time low of 4.3 percent of customers dropped their services.

To take advantage of people’s need to generate savings now more than ever, United Online has become more aggressive in its marketing, launching a campaign that highlights user savings of $300 a year by switching to NetZero’s $9.95 a month dial-up service.

“It’s the e-mailing group and people doing casual surfing around the Internet,” Chief Executive Mark Goldston said. “I am not suggesting that dial-up is better than broadband, but when it really comes down to it, the real question is: ‘How powerful is your need to save money?’ “

The interest in dial-up is the highest it has been since its glory days a decade ago, said Goldston, adding that it’s like going back to generic brands or using regular gas in a car that calls for premium.

Horowitz said shifting back from high-speed Internet to dial-up is like giving up a Maserati in favor of a horse and buggy. For some people, however, especially those who can access high-speed Internet at work, the hundreds of dollars they could save makes the prospect of a shift an attractive option.

FCC defines broadband as having speed of at least 768 kilobits per second. Dial-up Internet, on the other hand, has speeds at 56 Kbps, although observers say the more realistic figure is only 48 Kbps.

Another edge that broadband has over dial-up Internet is that it is always on. The connection is established when the computer is powered on and will remain so until the user disconnects it or the Internet Service Provider experiences technical problems. Dial-up access, on the other hand, requires users to initiate the dial-up connection themselves and then wait for several seconds before the connection is made.

If it weren’t for the price factor and the unavailability of broadband Internet in some areas, broadband would completely obliterate dial-up access. Broadband costs $20 to $55 per month or even higher.

The 2008 broadband statistics of the Organization for Economic Cooperation and Development (OECD) show that once the undisputed leader in technological advancements, U.S. now lags behind many countries in broadband infrastructure.

The United States only registered a 3.13 percent penetration growth per 100 inhabitants from 2007 to 2008. The US is well behind 11 countries such as Luxembourg (6.05), Germany (5.03), Greece (4.13), Ireland (4.12), Hungary (4.10), New Zealand (4.05), France (4.03), United Kingdom (3.88), Czech Republic (3.63), Sweden (3.41), and Canada (3.21).

The U.S. also falls behind other countries in the deployment of latest broadband technologies. In Japan, for example, 35 percent of its Internet connections make use of fiber optic, while only 3 percent of Internet connections in the U.S. are fiber optic.

Average broadband download speeds in Japan are said to be at 61-megabits per second, while it’s only 1.9-megabits in the U.S. Downloading a 4.5 GB movie file in Japan takes only 1.25 minutes, while users in the U.S. have to wait for 15 minutes.

Industry experts say being able to zoom along the information superhighway is only a matter of making broadband a national policy. It is hoped that the Obama administration’s current thrust of putting a premium on the broadband stimulus package which will pour $7.2 billion funding to improve the country’s broadband infrastructure and make it readily available to more Americans will address the problem.