12 Comments

Summary:

Time Warner has an uncanny ability to pick Internet’s red letter days. Its merger with America Online signaled the beginning of the end for the Internet Boom (or Bubble) 1.0. Today, by deciding to make AOL free, they sent dial-up to its final resting place. Sure […]

Time Warner has an uncanny ability to pick Internet’s red letter days. Its merger with America Online signaled the beginning of the end for the Internet Boom (or Bubble) 1.0. Today, by deciding to make AOL free, they sent dial-up to its final resting place.

Sure you can buy dial-up connections (and related services) and many will continue to do so, but for all practical matters from this point forward, its broadband or nothing.

Broadband, the platform not the service, is an omnipresent connection that has trained us to become intimate with the Google Search bar, spend hours on MySpace and get our just desserts on You Tube.

By throwing in the towel on its access business, AOL/Time Warner is telling all its $25-a-month paying customers: you can give this money to our competitors such as AT&T or Comcast, just keep using our friendly services. Either this is an incredibly astute strategy or simply the biggest corporate bungle since… well AOL & Time Warner merged.

Dick Parsons’ decision to tear down the (AOL) wall could go either way – just like the fortunes of the opposing super powers on two sides of the Berlin Wall. If online advertising continues to boom, it would be bouquets for Parsons, Jon Miller and AOL’s self proclaimed savior, Jason Calacanis. If the advertising market heads south, the trio would find themselves on the wrong side of the street.

Nevertheless, AOL’s decision is testament to broadband’s disruptive powers, and not even the biggest company with the deepest pockets is immune to it. Why? Because broadband causes behavioral change, and when a company can bottle that behavior change into a business model, it can make a lot of money. Google is a good example.

Thanks to broadband, Google is just a click away. We search, find and consume information; a marked shift from the old days when we went to destination sites and looked for what was available. Is it hard to imagine that in five years from now, most broadband users will expect real listings sans a map, and a video tour of the property. Or that online personals would come with an ability to chat, either via phone, IM or video.

AOL is simply seeing the writing on the wall. And changing … though the jury is still out on whether they can survive the change. Who’s next? Lets just say every Internet company from the pre-broadband era will need to reinvent, and rethink or lose everything. AOL, and a reluctant Time Warner are just the harbinger of the future.

data collected by Pew Internet

Charts source: eMarketer

  1. Om,
    I have been expecting such headline for while But, are all Internet users ready for such step? Isn’t it too fast?

    Share
  2. Tim,

    i think it is pretty clear that time for dial-up is done. i think internet users, are ready. i have seen my friends’ parents become different kind of users once they get broadband.

    Share
  3. Except for those of us who live in areas where there is no broadband. I’d switch if I could, but comcast won’t bring the cable up our driveway. Well, apparently they would for $22,000. We said no. The situation pretty much stinks if you live in the country.

    Share
  4. Dialup is poor man’s Interent. AOL’s conceptual and marketing pick is right, but don’t ignore the infrastructure question. Until there’s affordable and real broadband Internet access everywhere, dialup will be very important. Even numbers above show 10 million in 2010, so I dont’ think it would be a good thing if policymakers get the idea that they can do away with the service. IIRC, Skype algorythms take VoIP down to 36k versus 90k required for most – so it should work over dialup. Compression will only get better over time.

    Share
  5. Jesse Kopelman Thursday, August 3, 2006

    Erik, the problem with VoIP over dialup isn’t the throughput, it’s the latency and jitter. The modem bank sharing schemes that dialup providers use are just not cut out to support realtime services.

    Share
  6. Internet in the US… so slow. Some of you are asking if going broadband is not too early… come on, in Europe we have bandwidths up to 25 Mbit/s free calls 100 tv channels for 30 dollars a month and the next big thing we are all waiting is ftth which is already tested in France by Orange and which will hit the market in 2007 at prices lower than 80 dollars a month.

    the US is a big country and that’s really not good for internet connections. To sum up, Internet in the US is slow and expensive. Of course we all need a large bandwidth.

    If you want decent VoIP, take 100 kbit/s, SD TV: 3Mbit/s, HD TV: 8Mbit/s, internet: 10Mbit/s…

    Now let’s say you want to watch a HD channel, one of your kids is playing on the internet, the other downloading a divx and your wife watching TV also in HD. Do you think even 10 Mbit/s is enough? No we need a lotta bandwidth and the more we’ll have the more we’ll need cause the applications will follow. The roads were built before the cars…

    Yesterday, i took a look at Verizon’s ftth offers and I thought: “what a bunch of crooks!”, 180 dollars for 30Mbit/s and 4Mbit/s for the upload. First of all they could have offered 100Mbit/s for the download and offered the same speed for the upload! with ftth, upload speed = download speed but those crooks want to protect their friends at universal, sony… and prevent us from sharing at high speed mp3, divx…

    Share
  7. Jesse, few major players in wholesale voip/isp space use single functionality devices – like modem banks – anymore. e.g. Cisco AS400 supports modem dialup and VoIP over the same PSTN-facing port. This means that both ISP-bound dialup and dialup to VoIP or VoIP out to PSTN follows the same call path b/t handset and the “Internet”. In other words, it rides same copper, same TDM, goes through the same multiplexers, same COs, tandems, etc. So I’m not sure this hasn’t already or cannot soon be remedied.

    Either way, people need dialup where there’s not affordable broadband (or none at all).

    Thx.

    Share
  8. As cjewel observes (http://gigaom.com/2006/08/02/ding-dong-dial-up-is-gone/#comment-140118), dialup is NOT dead in non-urban settings, and won’t be for some time to come. My sister lives in a house that has never, in its 25-year existence, had cable TV because it’s beyond the range of the cable lines. Ditto any kind of broadband save satellite, which of course suffers from terrible latency. The distance from her house to the nearest CO can best be measured in miles, and it’s probably a two-digit value.

    So while dialup is certainly a shrinking slice of the market, it’s not gone yet.

    Share
  9. Jesse Kopelman Friday, August 4, 2006

    Erik, yes dialup player could upgrade their technology to support better quality VoIP, but they won’t. Where is the money to be made? If people just want cheaper calling over their PSTN connection there are already all kinds dial-around services that provide this. Trying to combine an ATA with a dial-up modem is more clumbersome than just requiring a prefix before dialing.

    Share
  10. First off; dial up is slow. Since broadband isn’t available in my area though I still use it. About to move though and switch over to Sun Rocket phone service (hope it works) and I haven’t decided which broadband service to go with yet. Is Vonage any good?

    I’m surprised by the Europe bandwith mention by Ludo. Now; I’m certain that is blazing fast. If only…if only here. I know someone in Scotland who gets just 8Mbps. I hope dial up is done away with soon because now everyone everywhere needs broadband in order to communicate, download, and do business online.

    Share

Comments have been disabled for this post