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Leslie Bonacum
Neil Allen

Surf’s Up: More Than 50 Million Consumers Now Online Up 11% In First Quarter And 62% Year Over Year

Online Providers Go On a Promotions Spree to Capture Customers
DSL, Cable Modem Usage Soar, But High Speed Access Still Uncommon

(WASHINGTON, D.C., May 2, 2000) – More than 5 million U.S. consumers joined the online world during the first quarter of this year, an increase of 11 percent since the end of 1999, and a whopping 62 percent more than a year ago, according to TR’s Online Census, compiled by Telecommunications Reports International (TRI), the leading telecommunications publisher and a unit of CCH INCORPORATED (CCH).  According to the quarterly tally of online subscribership, the nation’s largest Internet service providers (ISPs) now reach nearly 50.3 million customers, including those who access the Internet via television, digital subscriber line (DSL) service and cable modems.

TR’s Online Census, conducted quarterly by Telecommunications Reports since 1980, is the definitive survey on online access methods and trends.

"From rebates to free Internet access, this last quarter was marked by aggressive promotions on the part of ISPs that want to capture greater market share," said Amy Fickling, managing editor for Telecommunications Reports. "The increased availability of high-speed services via cable modem and DSL also has enticed additional consumers to get online."

Online Growth by Category

The most popular access method remains dial-up ISP. While that now accounts for nearly 46.7 million customers, the 10-percent growth rate in that segment during the first quarter was modest compared to growth in the emerging high-speed access marketplace. For example, TR’s Online Census reports access via cable modems increased by 44 percent while subscriptions to DSL service soared 183 percent.

However, both of these emerging markets have a lot of ground to cover to catch up with ISPs: cable modem providers captured just 2.3 million customers and DSL is getting its feet wet with under 200,000 customers. Access via Internet TV saw a slight decline in subscribers to just over 1.1 million.

Online Growth by Category

Service Category

Number of Customers

Growth During 1Q 2000

Dial-Up ISP



Cable Modems



Internet TV



Digital Subscriber Line






Source: TR’s Online Census,

Telecommunications Reports International


Who’s Ahead: Wooing Customers and Then Keeping Them

Heated competition, mergers and acquisitions and alternative business models have continued to have an impact on the top-tier ISP marketplace during the first quarter of this year. TR’s Online Census found that while America Online’s dominance remains intact, NetZero jumped into the number-two spot, thanks in part to an aggressive promotions campaign for its ad-supported free access service. EarthLink also climbed up to the number three spot after completing its merger with MindSpring.

According to the census results, the six largest ISPs now account for 73 percent of the total online audience. These ISPs are America Online, NetZero, EarthLink, CompuServe, MSN Internet Access and AT&T WorldNet.

"Free-access service providers continue to give traditional fee-based dial-up ISPs a run for their money," said Fickling, adding that some fee-based ISPs are responding with rebate offers in an attempt to attract and keep their subscribers loyal.

In addition to NetZero, other free-access providers emerging as strong competitors include Juno Online Services, which registered 2 million free web-enabled subscribers during the first 15 weeks after launching its service in December 1999. Also, Corp., which has entered into a number of reseller arrangements – most recent among them Excite@Home FreeLane, AltaVista, Lycos and GTE Internetworking – emerged as a stronger force.

CompuServe, MSN Internet Access and Prodigy were among the traditional ISPs offering rebates during the first quarter to attract subscribers. Such rebate offers typically provided PC buyers with a $400 rebate for signing up for three years of online service with the ISP.

High Speed Access Heats Up: Cable Modem vs. DSL

While the dial-up ISPs duke it out over market share, the ultimate competition may come from the still-emerging high-speed access providers.

"As more customers turn to high-speed access, the dial-up ISP market may see significant changes in its demographics and services as premium customers and features move to the high-speed platforms," said Fickling.

Adoption of cable modem access was strong during the first quarter, with 2.8 million subscribers now signed up – more than triple the number of subscribers just a year ago, according to the tally. Leading the cable modem market are At Home, followed by Road Runner, which in total accounted for nearly 98 percent of the overall cable modem market.

In the still nascent DSL market, which saw aggressive growth of 183 percent in the first quarter, TR’s Online Census found much of this growth attributable to the aggressive deployment and promotion of DSL by the Bell companies. For example, Bell Atlantic now has 900 of its more than 2,300 central offices equipped for DSL and SBC Communications has launched a $6 billion initiative to expand DSL availability in its markets. The top three DSL providers now are SBC, U S West and GTE.

Internet TV Holds its Own

While all other online categories reported an increase in subscribers, the quarterly report found that Internet TV providers saw their subscriber bases decline negligibly, by .2 percent during the first quarter. Microsoft’s WebTV is the undisputed leader in this market, with more than 98 percent of the subscribers, according to the online census.

To Obtain TR’s Online Census

Annual subscriptions to the quarterly online census are available for an introductory price of $149 by calling 1-800-822-6338.


Telecommunications Reports International, based in Washington, D.C., is the most respected provider of telecommunications industry news and analysis. Since 1934, executives and policy-makers have relied on TRI’s comprehensive coverage and analysis of major industry issues and events. TRI is part of the Business and Finance Group at CCH INCORPORATED, a leading provider of tax and business law information and software. The TRI web site can be accessed at

CCH has served more than four generations of business professionals and their clients, covering a wide range of legal and compliance topics including securities, insurance, banking, telecommunications, trade regulations and government contracting. CCH is a wholly owned subsidiary of Wolters Kluwer. The CCH web site can be accessed at The CCH Business and Finance Group web site can be accessed at

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EDITOR'S NOTE: For more information about TR’s Online Census contact: Leslie Bonacum at 847-267-7153 or Mary Dale Walters at 847-267-2038. Available to members of the press:

  • A copy of TR’s Online Census
  • Charts and graphs depicting the survey data

This release is posted in the CCH Press Center:


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