how did companies like AOL and Netscape make money selling Internet though the phone companies landline?

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I’m also particularly interested in how you were able to choose whichever 3rd party provider for your Internet?

No idea if this will take off but it was puzzling me the other day, if you took the time to read this, thanks, and have a great one!

In: Economics

6 Answers

Anonymous 0 Comments

Early dial-up services like AOL often charged by the hour

You would get the phone number(s) for the service and phone-in to the internet using a dial-up modem.

You needed to pay for a phone line from your telco separately (which most homes had anyway), and so long as said line was being used for the internet you would get a busy signal when calling the house. The Telco meanwhile would see the call to AOL as any other call.

So the short answer is you would pay your Telco + AOL to get online.

AOL would usually have local dial-up ‘servers’ within your region to avoid you having to pay long distance for the calls.

Said ‘servers’ would probably be a router with a couple T1 lines (1.5mb/s) plugged into it. One that was a connection for the internet itself like a modern fiber line, and another T1 that acted as a voice line with 24 channels or 24 simultaneous incoming calls from modems (23 + a control channel if you want to be pedantic).

Each users bandwidth was limited by speed of the modem, which in practice usually maxed out at around 25-30kb/s or for context barely enough for low-quality live audio, or 3-8 minutes to download the average MP3 file.

Different ISPs in the era would compete with deals, how much they charged per hour, or offering unlimited time online and charging for bandwidth used instead. AOL had a number of tools that they offered for free including an early web browser and indexing service to find stuff online (long before Google).

Once telco’s started offering their own dial-up internet services AOL started to be pushed out of the market and came up with different ways to be competitive. Eventually though broadband too over.

Netscape meanwhile wasn’t an ISP, they made an early web browser. Netscape charged for the browser, and when Microsoft made Internet Explorer free it resulted in a lawsuit but that’s a different ELI5.

Netscape’s spiritual successor today is Mozilla Firefox.

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