Decline in Customers Breaks 11-Year Trend for Internet Services
For the first time since it began compiling the statistics about 11 years ago, the newsletter Interactive Services Report said the number of customers using online computer networks fell by about 3% in the third quarter.
The quarterly survey of 28 major online services and Internet access providers found 20.5 million people used online services in the third quarter, down about 617,400 from the second quarter. This number is up significantly, however, over last year’s third-quarter figure of 15.1 million users.
“Summertime doldrums” and a move by seasoned Internet users to smaller vendors in search of better customer service spurred the downturn, said Catherine Applefeld Olson, senior editor of the Interactive Services Report.
“We’re rolling into a new phase of Internet usage. People have had time to play around through free trials with a couple services and now they have a better sense of what they want,” Olson said. “The bar has been raised. They’re not as tolerant with poor customer service.”
The decline was led by a 23% drop in subscribers since June 30 at Columbus, Ohio-based CompuServe, to 4.1 million. Instability at the nation’s second-largest online service, which announced a $1.27-billion deal to split its assets between America Online and WorldCom in September, has caused subscribers to leave for other providers, Olson said.
Prodigy’s customer base was down about 1% since the end of June, at 990,000 subscribers. Microsoft Network saw no change since the second quarter, reporting 2.3 million subscribers.
“The fact that Microsoft Network is flat is not good news for them. Despite the marketing they’ve done and re-tinkering of their content to appeal to a more serious Internet user, they haven’t managed to come out of no man’s land,” Olson said.
AOL, the nation’s largest online provider, reported a 3% increase since June 30, to 9 million subscribers. AT&T; WorldNet also posted gains of 6%, to 950,000 users. The report also includes larger regional services, such as Pasadena-based Earthlink, which reported an 11% gain from the second quarter, to 362,000 customers.
The report in the weekly newsletter, published by Washington-based Telecommunications Reports International, compiled data provided by 28 online and Internet service providers, six cable modem services, four free e-mail services and nine online game companies.
Researchers hope to start including ISPs with less than 15,000 customers--the fastest-growing part of the online services market--in the next issue.
