• by August 10, 2000

More than 11 million consumers joined the online ranks during the second quarter of this year, an increase of nearly 24% since the end of last quarter. But rather than pay a basic monthly service charge to a fee-based, dial-up Internet service provider, more consumers than ever are flocking to free, ad-supported services, or showing a willingness to pay a premium for high-speed cable modem or digital subscriber line (DSL) services, according to TR's Online Census, compiled by Telecommunications Reports International (TRI).

According to the quarterly survey of online subscribership, the nation's largest Internet service providers (ISPs) now reach 62.3 million customers, including those who access via traditional dial-up, Internet television, digital subscriber line (DSL) and cable modem services.

"Free ISPs fueled the tremendous growth in Internet access accounts this quarter and have reshuffled the lineup of the nation's largest consumer-oriented online service providers," said Amy Fickling, managing editor for TR's Online Census. "Meanwhile, high-speed providers, particularly DSL providers, continue to show significant growth rates, while most of the leading fee-based dial-up ISPs showed only single-digit%ages in their growth rates, if that." Online Growth by Category

The most popular access method remains dial-up ISP, which now accounts for more than 58.1 million customers. However, the 24% growth rate in this segment during the second quarter is due in large part to the success of free ISP services. Many of these free services show significant growth, while fee-based ISP growth hovered at around 5% on average.

With a growth rate of 51%, the category for DSL shows the most significant increase for the quarter. With just 286,300 subscribers, DSL is the newest entrant in the market. Also showing a healthy gain is cable modem access, with a 21% growth rate during the quarter to nearly 2.8 million customers. Internet TV, on the other hand, remains stagnant at 1.1 million users, according to TR's Online Census.

Free ISPs Leave Their Mark

One-half of the top 10 ISPs listed in TR's Online Census are now ad- supported providers. Collectively, the free ISPs account for 27% of the customer base served by the nation's largest ISPs. As America Online, with more than 23 million customers, accounts for another 37% of the ISP market, that means that only 36% of the market remains for the dozens of other participants to compete for.

According to the study's findings, the top 10 ISPs now account for 88% of the total online audience. These providers for the second quarter are America Online, 1stUp.net (free), NetZero (free), EarthLink, Spinway (free), Juno Web (free), CompuServe, MSN Internet Access, Prodigy and Freeinternet (free).

Among the free ISPs leaping into the forefront during the second quarter was 1stUp.net Corp., with 4.2 million customers, mostly gained through its private-labeled services for Alta Vista Co.