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Fewer wired homes as free ISPs vanish

A new survey says the number of U.S. homes with Net access dropped slightly during the first quarter of 2001--the first decrease in years.

The number of U.S. homes with Internet access dropped slightly during the first quarter of 2001, marking the first decrease in years, according to a survey released Tuesday.

The study, conducted by Telecommunications Reports International, found that the 0.3 percent decline to 68.5 million was partly because of the shrinking number of free Internet service providers. That said, the number of households paying for Internet access rose 8 percent, according to the telecommunication media group's report.

"We noticed over the past few years that many of the Internet service providers had helped spike the numbers. But with the recent demise of the free Internet service provider model, the numbers have begun to slightly fall," said Amy Fickling, managing editor of the report.

Amid the recent economic and Net-advertising downturns, many companies have dropped their free ISP services, saying the offerings don't bring financial success. Earlier this year, Kmart's Internet unit traded its free Web access for a fee-based model. Web portal AltaVista also ended its free Net services shortly after the company's parent, CMGI, closed its free ISP holding.

Tuesday's findings reflected this shift. Although free ISPs this time last year were enjoying their strongest growth, their subscribers numbers during the first quarter of 2001 dropped more than 19 percent to just 10.26 million.

see related story: Tough times for high-speed ISPs There was also a slight decline in new customers for DSL (digital subscriber line) access in the first quarter of 2001. This slowdown pales in comparison to the popularity of the market during the same period a year ago, which saw growth skyrocket 86 percent.

Helping to keep the home Internet-access market afloat were new subscribers to cable modem services and paid, dial-up ISPs, the survey said. The cable-modem market increased 18 percent during the first quarter; the number of paid, dial-up customers grew nearly 8 percent to 49.6 million consumers.