Message to Microsoft -- Dial-Up Is Not Dead

As impressive as the WOW Microsoft Vista release must have been, I was not able to watch the Webcasts. Microsoft seems to be under the impression that the world has all moved to fast broadband connections. Well, let me be the first to tell Redmond, "It just ain't so!"

The slowest speed provided for viewing is 100K. On Demand Webcasts are no better. In testing, the fastest playback I am able to achieve is 56 kbs. That just doesn't work well for Microsoft customers who use dial-up and are interested in learning more about new Microsoft offerings.

Dial-up? Yes, I am still on a dial-up connection at home. As a matter of fact, I have been using the same Internet Service Provider since Bluefrog Internet's debut in 2000 as a free ISP. It is no longer free, but the service has been excellent and fits within my budget.

Being curious on how many people Microsoft is missing by essentially ignoring dial-up consumers, I did a bit of investigating. After all, I was under the impression, based on a study a friend conducted last fall before going into business that approximately 40% of Internet access from home users in the U.S. is via dial-up connection.

The first thing I did was ask at Freedomlist. After all, a primary focus of FL is $10 & Under Cheap ISP's. A helpful reference to an InfomationWeek article was posted by member "Z". That article led me to a Government Accounting Office (GAO) report from May, 2006. Data from the GAO report is included in the References section at the end of this post.

A long-time Freedomlist friend also replied to my inquiry. Steve has has been involved in the ISP business for many years, having also founded his own successful ISP business. This is what Steve replied:

"The only stats I have are for the biggest ISP's by volume. Unfortunately the consortium who used to put all of this together is I guess working more on net neutrality these days than statistics.

http://www.isp-planet.com/research/rankings/usa.html

That was for Q3 2006. You can see some big numbers still in the dial-up arena, such as United Online at 2.4 million, LocalNet at 240,000. AOL still shows a large 15.2 million subs, but we really don't know the breakdown of dialup to dsl without more research. They are not allowed to count plans though with access from another carrier, so no BYOA plans included.

Some glaring omissions from this is that MSN no longer publishes its dialup data, and Earthlink just combines everything into one big fat publishing, so there could be another estimated 4 million subscribers in there alone.

Add to it the other ISP's section (that may or may not include Microsoft's MSN) and you may have as much 25.2% of the market on dialup from other ISP's who don't report. Those figures don't include DSL or cable though either, so smaller regional companies like Cablevision or Cincinatti Bell, etc. compile the ending.

Adding all of this up, I'm going to roughly state that maybe 35-40% of people are still on dialup at this point, although we don't really know if that is their primary connection or simply a backup too. So many factors to consider."

Based on the additional research I conducted, it is apparent that Steve's numbers are right on target. For example, in the 4/26/2006 Pew/Internet.org report below, of the 147 million adults who responded one year ago, only 42% had a broadband connection. Based on those figures, that leaves over 80 million adults who responded to the survey who would not be able to view the Webcasts or, most likely, download a trial copy of Office 2007.

The Government Accounting Office (GAO) reported on May 5, 2006, that "Broadband Deployment Is Extensive throughout the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas". The summary quoted below the Pew/Internet.org briefs explains why the data may not provide an accurate picture.

When considered in conjunction with the 2/26/2006 Pew/Internet report, there are then two reputable sources that are reflecting low/slow broadband growth in rural America. Also note the screen copy of the GAO "In Brief" section of the PDF. Merely having broadband networks deployed in a wide expanse of zip codes does not mean that such service is available.

According to the figures published January 11, 2007, at Internet World Stats for the United States, there are 210,080,067 Internet users in the United States. Even if an extravagant 60% use a broadband connection, that still comes out to about the same 80 million on dial-up as the shown in the Pew/Internet survey.

What about other parts of the world? As is shown below, dial-up is on the rise in New Zealand. In the U.K. the figures from August of 2005 indicated a bit over 52% had broadband. That leaves a large percentage of the population with dial-up connections. Consider also that broadband connections vary widely. There are many so-called broadband connections that are considered "slow broadband".

The bottom line is that Microsoft is missing a lot of people by not providing media for dial-up customers. I am afraid that it isn't merely trials of software like Office 2007 that dial-up and slow broadband users are missing. Security Updates often take quite a while to download. When a connection gets dropped, that also ends the download of the update. Making cumulative updates available on CD, even for a nominal fee, could go a long way in making security updates more accessible to customers with slow connections.

Unfortunately, I expect that I am crying in the wind. The reason is that countries like Japan and South Korea, with a huge sales base, has a much greater percentage of the population on high speed than the rest of the world. In addition, it is not unreasonable to suspect that major supporters and stakeholders are telephone and cable companies who want to make it as attractive as possible to move to DSL or Cable.

REFERENCES

From Pew/Internet.org:

Home Broadband Adoption in Rural America

2/26/2006 | Memo | John Horrigan, Katherine Murray

Rural Americans are less likely to log on to the internet at home with high-speed internet connections than people living in other parts of the country. By the end of 2005, 24% of adult rural Americans went online at home with high-speed internet connections compared with 39% of adults in urban and suburban areas.
View PDF of Report

Internet Penetration and Impact

4/26/2006 | Memo | Mary Madden

Over time, internet users have become more likely to note big improvements in their ability to shop and the way they pursue their hobbies and interests. A majority of internet users also consistently report that the internet helps them to do their job and improves the way the get information about health care.

While the share of internet users who report positive impacts has grown, the sheer size of the internet population also continues to increase. Surveys fielded in 2006 show that internet penetration among adults in the U.S. has hit an all-time high. While the percentage of Americans who say they use the internet has continued to fluctuate slightly, our latest survey, fielded February 15 – April 6, 2006 shows that fully 73% of respondents (about 147 million adults) are internet users, up from 66% (about 133 million adults) in our January 2005 survey. And the share of Americans who have broadband connections at home has now reached 42% (about 84 million), up from 29% (about 59 million) in January 2005.
View PDF of Report

Home Broadband Adoption 2006: Home broadband adoption is going mainstream and that means user-generated content is coming from all kinds of internet users

5/28/2006 | Report | John Horrigan

Adoption of high-speed internet at home grew twice as fast in the year prior to March 2006 than in the same time frame from 2004 to 2005. Middle-income Americans accounted for much of the increase, along with African Americans and new internet users coming online with broadband at home. At the end of March 2006, 42% of Americans had high-speed at home, up from 30% in March 2005, or a 40% increase. And 48 million Americans -- mostly those with high-speed at home -- have posted content to the internet.
View PDF of Report
View PDF of Questionnaire

GAO 06-426 Summary:

"About 30 million American households have adopted broadband service, but the Federal Communications Commission's (FCC) data indicating the availability of broadband networks has some weaknesses. FCC conducts an extensive data collection effort using its Form 477 to assess the status of advanced telecommunications service in the United States. For its zip-code level data, FCC collects data based on where subscribers are served, not where providers have deployed broadband infrastructure. Although it is clear that the deployment of broadband networks is extensive, the data may not provide a highly accurate depiction of local deployment of broadband infrastructures for residential service, especially in rural areas.

GAO 06-426 (PDF) In Brief:



New Zealand: Computer World reported in April 2006:

New Zealand dial-up customers are on the rise, with Statistics New Zealand reporting a 4.1% increase in the number of active accounts between March and September last year.

UK: National Statistics says UK now has 52.4% broadband connections
18 August 2005

Category: Research - Regional, National & International
Location: UK Wide

National Statistics has released its latest monthly update to the survey of Internet Service Providers (ISPs) which shows that in June 2005, broadband connections formed 52.4 per cent of all connections, up from 50.7 per cent in May 2005. The index of all connections showed that between June 2004 and June 2005 there was a 5.2 per cent increase in the total number of active subscriptions to the Internet. The index decreased, by 0.2 per cent, between May and June 2005. Dial-up connections continued to decline and now account for 47.6 per cent of all connections.