Is dial-up Internet dead?

By Damaria Senne for Telkom
Johannesburg, 29 Sep 2006

Opinion in the marketplace is divided as to the cheapest Internet option for low-end residential users, with Sentech saying dial-up Internet is dead.

Sentech`s broadband wireless portfolio manager Winston Smith says of the three available connectivity choices (dial-up, wireless and ADSL), wireless broadband Internet provides the best service at the cheapest price for the average consumer.

"Dial-up is just too expensive and the speed of connectivity is very slow," he says.

Additionally, the price charged by the Internet service provider (ISP) is not the real cost of using dial-up Internet, as it excludes line rental costs of about R100 a month and minimum phone bill of R200 for a consumer who spends at least 20 minutes online, Smith adds.

The effective Internet access bill amounts to a minimum of R400, with additional usage spent online increasing this monthly cost, he notes.

Nashua Mobile MD Mark Taylor adds that, in addition to the cost factors, dial-up does not allow users to enjoy all the benefits of the Internet.

"When the meter on your phone bill is running, you don`t want to be waiting for a large file to download over a grindingly slow dial-up connection," he says.

Cutting usage costs

However, Telkom argues that dial-up Internet, which accounts for 80% of the total Internet market, is still the cheapest way for consumers to enter the Internet market.

Subscribers who plan to spend longer periods of time using the Internet can take up a calling plan, such as Telkom Closer, to make surfing more affordable, says Telkom spokesperson Lulu Letlape.

Telkom Closer gives the consumer the option of adding an Internet subscription that offers 150 hours of surfing during off-peak time, at only R150 per month, she says. This works out to a rate of only R1 per hour of dial-up surfing, she says.

However, if the user is regularly downloading music or video clips, searching or sending large data or graphic files, or their normal monthly phone bills exceed the monthly broadband subscription, then that consumer should definitely consider switching to a broadband option, says Polka brand manager Kaye Munnik.

The death knell

World Wide Worx MD Arthur Goldstuck, MyADSL founder Rudolph Muller and Taylor agree dial-up is on the way out, although Muller still sees a place for it in SA.

Demand for ADSL has grown by over 150% a year in the past two years, Taylor says. Goldstuck notes that his company`s annual small and medium enterprise (SME) survey shows that dial-up penetration fell from 62% in 2003 to 18% in 2006, and ADSL penetration increased from 2% to 42% in the same period.

By 2008, dial-up will be dead in the SME environment regardless of broadband pricing, he says. "But if broadband pricing can be pushed down hard, and reach the level of dial-up, we will see dial-up disappear as a viable product offering from South African ISPs by 2010."

The heir

Smith argues that wireless broadband is the more attractive option as compared to fixed-line broadband. However, both Muller and Goldstuck place fixed-line broadband first.

Wireless will only become a viable broadband alternative when its coverage, reliability and consistency of throughput have been sorted out, Goldstuck says.

He predicts that when the cost of ADSL comes down to the same level as premium ISP subscription costs, which is around R140, broadband will almost overnight replace dial-up.

Muller, who notes there are close to 1.5 million dial-up and 170 000 ADSL Internet subscribers, sees the switchover happening much earlier. When ADSL access is priced between R200 and R300 per month (all charges included and much higher data limits than currently offered by Telkom), it will most likely mean the death of dial-up, he says.

"There will simply not be any reason to stick with dial-up, as it is slower, ties up your phone line and will cost more than ADSL," he adds.

Source: MyADSL