Dial-up Internet: CR survey reinforces need for broadband stimulus funding

Consumer Reports News: April 09, 2009 06:08 AM

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Regulators, legislators, and telecom companies are still deciding how best to divvy up the $7.2 billion in stimulus funding allocated to expanding access to broadband Internet across the country. Advocates are also weighing in, including Chris Murray, a senior lawyer for Consumers Union, the parent company for Consumer Reports, who was quoted in USA Today as saying "If we do it right, we can connect a critical segment of the U.S. population to the knowledge economy," he says, referring to the 40 million-plus consumers living in rural and low-income areas who don't have broadband.

Many such homes must turn to dialup Internet services to access the Web, as a new Consumer Reports survey helps reinforce. The study also shows that dialup, despite its slower connections, isn't always as cheap as you might think.

Drawing on the experiences of more than 900 customers of major dialup providers included in the Consumer Reports National Research Center's 2008 Annual Telecom Survey, the study found about one in four dialup households reported wanting to switch their service but couldn't. Of these, almost a third said they couldn't switch because no other services were available where they live, and more than 20 percent said the other providers were too expensive.

But the survey also shows dialup isn't always as cheap as the services offered by Internet providers NetZero and Juno. Ads from those companies promote their $10-a-month services as cost-saving options for cash-strapped broadband households.

About one in ten survey respondents indeed paid $10 or less for dialup. However, a much higher proportion paid $21 to $30--which approaches or even exceeds what you might pay for broadband service, especially as part of a bundled deal with TV and phone service (see our Ratings of such bundles, available to subscribers). — Paul Reynolds