In an interesting dial-up to broadband conversion strategy move, AT&T is raising the cost of its dial-up Internet service above its broadband DSL service. New dial-up customers will pay $22.95 per month for dial-up, and existing $9.95/month and $15.95/month customers will see their monthly costs rise to $15.95 and $22.95 respectively. AT&T’s lowest published DSL price is $19.95/month, although a condition of their Bellsouth acquisition compels them to offer basic DSL service (768K service) for $9.95/month in many markets.
Dial-up has lost its favor with larger carriers because collectively, more people access the Internet via broadband than dial-up. Larger carriers are much more interested in moving dial-up customers to broadband than in continuing to serve dial-up customers at all. AT&T figures that the remaining dial-up stragglers probably need to be “forced” to convert by making dial-up more expensive than broadband. There will be a select few for whom broadband conversion is not an option, simply because it is not available in their market. Dial-up has become a niche, zero growth business. That being said, there is a population of Internet users who are quite happy with dial-up, and see no need to move to broadband. Moves like this one from AT&T may create business opportunities for companies interested in serving the niche dial-up market. ISP competitors like Juno are sure to swoop in and court dial-up customers who won’t be thrilled that there monthly price has gone up 60%.