Artera Turbo drafted a former Ascend and Cisco sales executive to reach out to small- and medium-sized ISPs across the nation with a dialup product for both residential and business services.

by Alex Goldman ISP-Planet Associate Editor [November 7, 2003]

Don't ditch dialup! For small, independent ISPs—and even for the biggest ones—profits in broadband are elusive but dialup has always been profitable. When AOL dropped its price for some services to $9.95 per month, some analysts saw that as a sign that competition in dialup is getting tougher—but the price drop could also be read as an admission that AOL was making a great deal of money off of customers who had been paying more than double the new price.

In small towns and villages across the nation, ISPs are still making money providing dialup to local customers—along with a side dish of superior customer service.

But value-added services seem to promise the possibility of even greater profits. One promising service is accelerated dialup. Recently, some ISPs have complained to us that the established dialup accelerator companies are not serving companies as small as they—but these companies must not have talked to Middlebury, Conn.-based Artera Turbo.

When we asked John Neunan, the company's vice president of North American sales, how small an ISP the company would work with, he replied. "I've got one ISP with 100 users. They've had a 22 percent takeup rate with Artera Turbo."

Features
The product does more than acceleration, although that is the product's prime purpose. It uses several technologies to speed the throughput of a dialup user's Web connection. The company uses local caching at data centers around the world to store copies of frequently access pages. According to an agreement signed on April 21, 2003, Avaya will pay Artera royalties for its product and help Artera establish a worldwide network of data centers for better local caching. Neunan says that the enhanced dialup speeds provided by Artera's product improve the quality of Avaya's VoIP solution.

The software also maintains a persistent connection, reducing unnecessary network overhead generated by the TCP/IP protocol.

It speeds Web delivery by compressing content sent from a Web server. Although it cannot compress e-mail messages, it does compress attachments, which can significantly improve e-mail delivery speeds. Neunan says that because the software compresses images, it degrades them less than some competing products. Users who do not like image compression can turn it off.

Finally, the software also tweaks the Windows OS to set up optimum settings.

Artera also provides several additional services. It provides ad blocking and pop-up blocking. "We don't catch all pop-ups, but we get a lot of them," says Neunan. Users can turn off ad-blocking with a single click.

The product also offers content filtering, firewall, and parental controls.

The rural market
Neunan understands that many small ISPs dominate their market. "A lot of the ISPs out there are based in rural areas and have a protected market or a specific segment of the market. Customers cannot get DSL or cable, or it's being deployed slowly, or at a high price, and customers are price sensitive."

In these areas, businesses such as insurance agents and travel agents and even general retail stores want fast Internet access. They cannot pay $799 per month for a T-1 line, or even $599 per month. So they opt for accelerated dialup.

One Artera customer, Mt. Pleasant, SC-based Carolina Internet Services, is a business-only ISP. Founded in 1990, the company does have some large customers, but most of its customers are small businesses, and many of those rely on Artera.

The Artera Group is part of publicly-owned NCT Group (OTCBB: NCTI). Another NCT subsidiary, Midcore, developed the Artera technology. Originally, NCT Group planned to buy a global network of ISPs but the company changed the strategy, decided not to buy its first target, New York City-based Compuhelp. It is instead licensing the software to ISPs around the world. It has many customers in the mainland United States but also has customers in Hawaii and Puerto Rico. Further afield, the company has Artera resellers in the Netherlands and the UK.

Neuman believes in the small ISP market because he sold to it when he worked for Cisco and Ascend. "I remember when we sold the first Ascend MAX TNT. We sold it to Erol's Internet Service, which has since been bought by RCN."

While the Internet has progressed a long way, the Ascend MAX TNT boxes are still in service across the U.S., and dialup is going strong. The technology has not changed a great deal. "Modems were maxing out. They were reaching their theoretical speed limits. Artera is basically in the business of making those modems smarter. We're extending the life of the modem."

Dialup is far from dead.

Pricing and availability
The product starts at $3.50 to $4 per user per month, depending on the size of the ISP. ISPs that do their own billing get a discount of about $0.60. ISPs that do level 1 support get an additional discount of $0.80. Larger discounts are available to ISPs that host the service on their own data center, and to ISPs who offer the service to all of their customers.

Prices are set based on what the company expects ISPs to charge for the service. "We find that ISPs cannot charge over $7 per month. We think the sweet spot is $4 to $6 per month," says Neunan. "One ISP started at $10 and 5 percent of their users signed up. Then they dropped the price to $7.95 and got to 15 percent. Now they've dropped the price to $5 and are at 35 percent and climbing."

—End