Top U.S. ISPs by Subscriber:
Second Quarter 2002 Insights

Before we review the performance of top U.S. ISPs during the second quarter of 2002, we'd like to take a moment to remind readers why we started tracking this data in the first place.

by Patricia Fusco Managing Editor, ISP-Planet [August 21, 2002]

About two years ago, several providers were claiming they were the second largest ISP in the U.S. We wanted to determine whose claim to the second slot was true, so we started tracking the quarterly performance of publicly held ISPs.

Of course, we could not go out and count every subscriber ourself. We had to rely on companies' counts of their own subscribers. Over time, we've learned that subscriber numbers are often padded or at the very least, highly generalized when reported. ISPs rarely break out subscribers by type so that, for example, we have no idea how many AOL dial-up subscribers pay the full monthly fee—or even how many AOL subscribers use dial-up.

The subscriber numbers reported by "free" ISPs were particularly perplexing. Eventually, we learned that they were counting anyone who had ever signed up for an account. We then asked for the number of subscribers who were actually using their free accounts, and found that the industry had settled on a definition that still inflated number—an "active" user was one who had used the account at least once in the last sixty days.

Narrowband leaders
As we delved deeper and deeper into the fine print of subscriber numbers, our mission migrated from figuring out who operated the second largest ISP in the U.S. to challenging ISP operators to provide subscriber figures in a consistent and accurate manner.

For example, we routinely had to badger America Online representatives in order to collect U.S.-only subscriber figures. In July 2002, AOL reported a breakout of U.S. subscribers for the first time since we've been observing and tracking its quarterly performance. We didn't have to go hunting for AOL's European and Latin American subscriber statistics to get an accurate picture of AOL's subscribers in the U.S.

As a result, we can tell you that the AOL picked up 400,000 users during the second quarter of this year, growing its subscriber base 1.5 percent from April through June. If only MSN would follow AOL's lead, we could compare its growth rate with the top ISP in the U.S. But MSN chooses only to report "milestones," so our data for the second largest ISP in the U.S. is based on a May 2002 report.

We also discovered that MSN rolled MSN TV (formerly WebTV) users into its press release heralding its 8 million subscribers watershed. Also included in the figure were "miscellaneous" users, so we had to work with MSN's public relations firm to arrive at 7.7 million subscribers—as reported in May 2002. Even with old data, MSN remains the second largest predominantly dial-up ISP in the U.S. at this time.

EarthLink is the third largest predominately dial-up ISP in the U.S. Even though United Online reports an active user base slightly larger than the Atlanta-based ISP, EarthLink still has about 3 million more paid subscribers than United Online. In fairness to both ISPs, we've ranked EarthLink fourth in our overall ranking, but third in our predominately dial-up category.

EarthLink also provided us with a breakout of subscriber types, something we have been trying to get all publicly held ISPs to report each quarter. Of its 4,686,000 subscribers, 4.082 million are narrowband users and 604,000 are broadband users—a category that includes DSL, cable, and satellite subscribers.

EarthLink added about 72,000 broadband subscribers in the second quarter, reflecting a 74.6 percent increase over the prior year. Narrowband subscribers declined 6.6 percent from a year ago. This reflects the maturing of the premium dial-up access market. But it also reflects EarthLink's recent price increase and the continued migration of customers to broadband access. In total, EarthLink ended the second quarter with approximately 4.9 million paying subscribers, down 0.6 percent from the prior quarter. We expect EarthLink's dial-up subscriber base to rebound in the third quarter when it completes migrating PeoplePC's subscriber base into its fold, adding some 590,000 users.

CompuServe remains ranked as the fourth largest dial-up ISP in the U.S. for the second quarter of this year. But we have not been able to get AOL, CompuServe's parent company, to provide updated subscriber figures from May. So it is impossible to see if CompuServe, touted as one of the oldest ISPs in the U.S., has maintained its narrowband subscriber base through mid-year 2002.

Surprisingly, SBC/ Prodigy is tied with United Online for the position of fifth largest dial-up ISP in the U.S. Since SBC maintains operating control of Prodigy, the southern telecommunications company prefers to report its subscribers as one lump sum, highlighting only broadband growth in DSL subscribers.

With a little help from SBC's communications department, we can tell you that SBC/Prodigy currently provides connectivity to 3.4 million subscribers, 1.7 of which are narrowband users. At the end of March, 2002, SBC/Prodigy reported it served 1.8 million dial-up users, a dial-up decrease of 100,000 users that is more than made up for by its gains in DSL subscribers. We'll discuss broadband subscribers later.

United Online, the parent company of discount dial-up ISPs Juno and NetZero, has consistently obliged with accurate reports of users and paid subscriber figures. With an active user base of 4.8 million in the second quarter of the year, we list United Online as the third largest ISP overall in the U.S. But in terms of paid subscribers, United Online is actually tied with SBC/ Prodigy as the fifth largest dial-up ISP in the U.S.

United Online's active users in the second quarter dropped 7.7 percent from its first quarter performance of 5.2 million active users. But its paying subscribers increased 6.2 percent, which can only be good news for the formerly free ISP.

Historically, AT&T WorldNet was the sixth largest dial-up ISP in the U.S. But the narrowband arm of AT&T stated that it no longer counts these subscribers as part of its quarterly reports. As a result, we've pulled AT&T WorldNet's 1.4 million users from our ranking, as last reported. This means that CoreComm, formerly Voyager.net, can lay claim to being the sixth largest dial-up ISP in the U.S. with just under 300,000 subscribers.

When CoreComm last reported results for 2001, the company served 332,500 Internet subscribers. All of these numbers declined during its recent restructuring. The company was recently relisted on the Nasdaq NM in July. With 240,000 dial-up subscribers reported and confirmed, CoreComm is the seventh largest dial-up ISP in the U.S.

Rounding out our top dial-up ISPs in the U.S is Bluelight, the maligned property of K-Mart. With its parent company restructuring, Bluelight lost about 20,000 subscribers from between the end of April and the beginning of August. We expect that Bluelight will pick up new subscribers when bargain hunting students head back to school.

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Online Resources:

	Subscriber Rankings in the U.S.
	Subscriber Value by Category
	Subscriber Ranking History