Enhanced Dial-up: Sweet Spot or Dead End?

Internet service provider EarthLink has launched a new service to lure subscribers who want faster connections but aren’t willing to pay for broadband.

EarthLink Plus improves download speeds up to five times over standard dial-up, the Atlanta-based company said. It costs $28.95 per month, $7 more than standard dial-up, comes with a guarantee that help calls will be answered within five minutes.

By comparison, EarthLink’s Cable Internet, a broadband service powered by ComCast, starts at $45.95 per month, plus a $3 per month modem lease fee.

EarthLink has 4.2 million dial-up customers and 779,000 broadband subscribers. Spokesman Jerry Grasso said the company isn’t worried about slowing upgrades to the faster, higher-priced service.

“The customer who is an EarthLink Plus candidate will not be looking to broadband,” Grasso told internetnews.com. “It may be cost prohibitive for them, or they may live in an area that (broadband) service is not available.”

EarthLink Plus uses a proprietary “Web Accelerator” from Propel Software which reduces the size of Web pages and elements sent to users’ browsers. While EarthLink is its largest partner, Propel, of San Jose, Calif., has pacts with a dozen ISPs.

Discount dial-up giant United Online , which sells to consumers through its Juno and NetZero services, is testing is own enhanced dial-up access product.

The Westlake Village, Calif., company’s offerings, Juno SpeedBand and NetZero HiSpeed, will reportedly use caching and compression to cut download times. According to The Wall Street Journal, United Online is charging product testers $9.95 for the first month and $14.95 per month thereafter.

But some ISPs are uninterested in creating a stop-over on the road to full broadband adoption. America Online spokesman Jim Whitney said the company’s focus “is on building awareness around our new broadband offering.”

AOL is moving to make the most of the growth in broadband among U.S. consumers, and looking for ways to keep its huge base of 35 million dial-up subscribers with the AOL service in some fashion when and if they upgrade to high-speed providers.

Research firm Strategy Analytics estimates that 27 percent of all U.S. Internet homes presently use broadband connections, with expectations of more than 70 percent by 2008 — that’s approximately 64 million subscribers or 59 percent of all U.S. homes.

Already, erosion of AOL’s dial-up base is showing. During the fourth quarter it lost 176,000 narrowband subscribers.