You can't kill dial-up: global broadband subs are expected to number 200 million by 2007 out of a total Internet base of 1 billion—that's a lot of users unaccounted for - Tanner

Telecom Asia, Sept, 2003 by John C. Tanner

Be warned--dial-up access is doomed. Again. And this time, they mean it. In this case, "they" is IGI, whose latest study of the US broadband market claims that by the end of 2007, the US broadband customer base will be over 75 million, which will amount to 70% household penetration rate. Therefore, says IGI, "dial-up access [will be] virtually non-existent by the end of 2007." The headline of the press release announcing the study was more direct: "Dial-up Access Dead by 2007".

On the face of it, such a headline deserves a healthy amount of skepticism for a number of reasons. For a start, we have heard this several times before. I remember dial-up being declared as good as dead five years ago when ADSL Lite products first hit the street, and I've heard it at least once ayear since then. If nothing else, other projections aren't nearly as optimistic--Yankee Group, for example, puts the US broadband subscriber base at 50 million in four years. And that includes fringe broadband options like MMDS, satellite, FTTH and powerline.

However, the real root of my skepticism comes from having a global perspective. Maybe in the US, where the above IGI study is focused, dial-up is on the wane and has about four years left in it. The same could also be argued in select markets where either broadband has become the rule rather than the exception (e.g. Korea), or Internet penetration is saturated enough that broadband providers have a solid base to start migrating narrowband customers to the promised land (e.g. Taiwan). However, dial-up has more life left in it than some may think.

By the numbers

The obvious place to start is the numbers. By most estimates, the global broadband population is expected to be around 200 million or so by 2007. The number of total Internet users is expected to be at least 1 billion. That leaves a lot of non-broadband users unaccounted for. In Asia alone, Yankee Group forecasts 300 million paying Internet users by 2007-200 million of which will be dial-up users.

This doesn't mean that dial-up will still dominate all markets, but you're likely to find the dial-up strongholds in Europe, where broadband has been slow to take off, and underdeveloped countries where even narrowband Internet penetration is low, and broadband is expensive and barely out of the gate.

The two main issues are price and infrastructure. DSL is great if you live within 5 km of the central office. If you don't, dial-up may be your only option unless the local cable operator passes your home, and offers broadband services at a price you can afford, or unless you can spring for a satellite Internet service (which often requires a dial-up connection for the return path). In most developing countries, this is unlikely to be the case for years, particularly outside of the urban centers where infrastructure rollouts tend to take priority, while the suburb fringes and rural areas are lucky just to get POTS.

As for price, broadband doesn't have to be as cheap as dial-up to draw more customers, but it helps. Certainly there's value-add in a faster connection speed, but only if the apps are there to justify it. For all the hype over MP3 downloads and online games, there are plenty of Net users in the world who have no need for either, and will resort to 56-k dial-up if they can't afford a broadband upgrade.

The road from here

Sure, all of this is changing, and there's no denying that dial-up is living on borrowed time. Witness the struggling standalone dial-up ISPs in booming broadband markets--if that's not an omen, I'd like to know what is.

It's clear that the choices for broadband access are widening, depending on how "broad" you think broadband should be. For example, a "broadband" cdma2000 1x PC card plugged into a laptop is faster than dial-up (not much, but enough that you'd notice). In Australia, "broadband" is around 256 kbps, which visiting metro Ethernet customers from Greater China probably find hilarious (unless they actually have to use it), but at least it's faster than 1X--at least until Telstra launches EV-DO. But I digress.

Either way, deployments are ongoing and prices are going down as more dial-up users make the switch and new surfers leapfrog to the latest technology. And with the rise of up-and-coming ad-hoc wireless technologies using unlicensed spectrum (802.11a/b/g, 802.16a, Bluetooth, UWB, Wi-Media, RFID, and so on), we've clearly just scratched the surface of the broadband paradigm.

But we've got a long way to go before we get there, and while we will cover plenty of ground in the next four years, dial-up will still be here and in widespread use, though more so in some markets than others. In decline? Of course. Dead? Hardly.