1

This is a follow-up from my previous question - When connecting to the Internet via Dial-Up, why did ISPs require a username/password to authenticate the session?.

In the above question, we established that ISPs offering dial-up services to customers typically authenticated sessions via a username/password to allow customers to dial-in from separate locations. Taking the above into account, I'm now interested in how an ISP would primarily charge customers. Was this on a rolling month-by-month basis, or was a contract typically used as is the case today so that a customer would be tied in for a certain period of time? How much would ISPs typically charge for a dial-up service?

  • Can we narrow the time and/or location a bit? Expecting there were be variances between countries and also timelines. – Foon Apr 13 at 16:18
2

In the UK with dial-up ISPs in the mid-to-late 90s such as WHSmithnet and Freeserve, you typically had a choice of a flat rate per month with unlimited access, pay-as-you-go/pay-as-you-surf where you were charged only for the call, and something in the middle where you paid a subsidised rate per month to have a reduced per-minute cost.

You can see a description of the WHSmithnet plans as of 2002 in the Internet Archive here:

http://web.archive.org/web/20020202001840/http://www.whsmith.co.uk/whs/Go.ASP?MENU=WHSmithnet&pagedef=/todaynet/home/show_ispreg.htm&data=isp_reg

Flat Rate: £12.99 per month (inc. VAT). No call charges 24 hours a day, 7 days a week. This option requires a BT phone line.

Off Peak: £9.99 per month (inc. VAT). Access to the Internet between 4pm and 8am weekdays and anytime at the weekend is included. Calls charged at 2p per minute at all other times. This option requires a BT phone line.

1p per minute: £2.99 per month (inc. VAT). You can access the Internet at anytime for just 1p per minute. This option requires a BT phone line.

Pay as you Surf: No monthly fee. No minimum term. Calls charged at local rate at all times.

I'm currently looking up the typical price of a local call in the UK in 2002, but I suspect it was something like 5p-35p depending on provider and location.

The following shows the expected (or at least advertised) use cases for these plans:

Which Internet connection option best suits you? Use the suggestions below to help you choose.

-

In my household:

We use the Internet for more than 12 hours per month

We may increase the amount we use the Internet

We may use the Internet during the day or at peak periods

We want to be able to budget for our Internet use

= Flat Rate: £12.99 per month, no call charges 24 hours a day, 7 days a week.

-

In my household:

We use the Internet more than 11 hours per month

We use the Internet mostly after school, in the evenings and at weekends

We want to be able to budget for our Internet use

= Off Peak: £9.99 per month, Access to the Internet between 4pm and 8am weekdays and anytime at the weekend is included. Calls charged at 2p per minute at all other times.

-

In my household:

We use the Internet for more than 6 hours per month

We want low cost Internet access anytime of the day

= 1p per minute: £2.99 per month (inc. VAT). You can access the Internet at anytime for just 1p per minute.

-

In my household:

We use the Internet occasionally

We prefer not to be committed

We want access to the Internet from anywhere

= Pay as you Surf: No monthly fee. No minimum term. Calls charged at local rate at all times.

More information can be found in the WHSmithnet FAQ:

http://web.archive.org/web/20020215234533/http://www.whsmith.co.uk/WHS/Go.ASP?MENU=WHSmithnet&pagedef=/todaynet/home/show_ispreg.htm&data=isp_faqs

| improve this answer | |
1

I co-founded an ISP in Vancouver, Canada in 1995. At that time the vast majority of services charged month-by-month. As I recall, up to the mid-90s most services gave you a fixed number of hours per day or month that you could be connected, but some time around then "unlimited access" started to become a thing and soon enough most (but not all) ISPs were doing that. This was also around the time it started to become fashionable to lose money as an Internet startup. :-)

| improve this answer | |
1

The question is way too broad, not least because it is not geographically-bounded, and there are as many ISP business plans as their are ISPs. However, you can look at the technology and business conditions of the day and get a feel for the various options.

My experience is mainly from the UK in the 1995-2001 era. The state-owned telco had been privatised a decade beforehand so there were relatively few restrictions, but it was still effectively a monopoly provider and priced appropriately. Other European countries had it much worse; some would have had it better. Given the vagueness, prices I give are zeroth-order approximations. There are still order-of-magnitude differences between countries today.

The minimum equipment required to set up a dialup ISP is some sort of Internet connection, some sort of PSTN connection and modems to answer calls, and a router to plumb the two together. Although not strictly required, users would expect the ISP to also provide a mail server, possibly Usenet access, and maybe even a bit of webspace for their home pages. (This would be the same now in 2020 with a for-fun setup lashed-together over VoIP or a softmodem running in Asterisk as it did in 1990 with real phone lines and real modems.)

A 64kb/s leased line would have been around £1-10k setup depending on location, and £1k/month with a 1-5 year minimum. Each POTS line was £100 setup plus £10/month with a 12 month minimum. A modem was around £100. A computer (to be a router and/or mail/Usenet/web server) was around £1k. An enthusiastic but naïve techie to make it work could be hired for £1k/month.

As the business expanded, that 64kb/s line would be added to or upgraded, the wall of POTS lines, modems and port concentrators would be replaced with more compact ISDN30 lines (in Europe; T1 in the US) and specialised ISDN30 digital modems (which as a useful side-effect also increased the maximum dialup speed from 33.6kb/s to 56kb/s) and so on, but that stuff was professional kit rather than a lash-up of consumer gear and so even more expensive.

So the ISP's costs are running into the thousands per month before they've even gotten their first customer.

However, although the opex and capex costs are outrageous, the setup cost of a new customer is virtually zero: an entry in the RADIUS database and perhaps a bit of phone support if they couldn't be bothered to read the instructions. The marginal costs were the POTS circuit dedicated to the user while they were connected, and whatever bandwidth they were using.

There is no need to bind them into anything but a month-by-month contract to cover the costs. The user would pay around £10/month, mostly because Demon Internet pioneered dialup Internet in the UK and ran with "tenner a month" in 1992 when they started and stuck with it until the bitter end. Although there was a cost to the ISP in tied up equipment whenever a user was connected, because local phone calls cost up to £2.40/hour, that tended to limit call time and ISPs could offer flat-rate access. In countries such as the USA with free local calls, they'd have to find some other way to discourage usage such as per-minute charges or an hours cap.

Although BT was a de facto monopoly for consumer connections, Mercury were offering business services in the 1980s and so there were legal structures in place setting out settlement rates for cross-telco calls to cover the various trunk and last-mile costs. Trunk costs cratered as technology improved into the 1990s — upgrade the fibre-optic equipment on the ends of an already paid-for line and it can carry many more calls — and so the last mile revenue became significant enough that by around 1997 large ISPs could demand a cut of that £2.40/minute by shopping around telcos, or even just becoming a telco. Initially it merely subsidised operations and helped avoid increases to the monthly fee, but eventually Freeserve came along and pretty much copied Demon but operated purely from call revenue, making the question of contract duration moot: if you stop calling, you're no longer paying for the service.

Eventually FRIACO came along which the consumer could opt to pay a bit extra per month for free calls to ISPs participating in the scheme, bringing the USA's problems to British ISPs, but this was at the same time as ADSL was kicking off so heavy users were abandoning dialup and the usage caps were set high enough that it was effectively unlimited for all but the small handful of abusive users treating it as a cheap leased line.

Sleazier ISPs would bind people into longer contracts and/or be difficult about cancellation, but there was no need to do so.

| improve this answer | |

Not the answer you're looking for? Browse other questions tagged or ask your own question.