550 Access - Cheap Internet Providers


Dial-up service expects calls
Oct. 29, 2004

As broadband prices fall, entrepreneur adapts with $5.50-a-month plan

Analysts predict dial-up Internet access will go the way of black and white TVs in 10 to 15 years.

Yet Houstonian Vivek Dave expects to sell more of it for a paltry $5.50 a month. And he wants his company, 550Access, to have 10 million customers by 2008.

Dave hawks a service akin to a stripped-down version of AOL, targeting users who just want to check e-mail or surf the Web and not use Web space, news groups or other extras.

"Why pay for a buffet when you only want an appetizer?" he asked.

But the buffet is getting cheaper.

With broadband prices dropping — SBC this week announced $19.95 broadband services with the purchase of a specific calling plan — the switch will likely happen sooner than later.

The low-cost ISP market, where service is priced below $20, will swell to 23.1 million users by 2008 compared to 18.5 million users this year, according to Jupiter Research.

But after the short-term growth, the low-cost market will also border on extinction by 2015, said Joseph Laszlo, a senior analyst at Jupiter.

"That transition is bound to take place to broadband, where it will stop making sense for consumers to go to dial-up," he said.

Dave agrees.

He realizes that users will eventually grow out of or skip dial-up no matter how low the price goes. By then he hopes to break into the broadband market and leverage his client base.

"Today's dial-up users are tomorrow's broadband users," he said. "We will have to get into that line, too."

Making revenue elsewhere

Most low-cost ISPs also make their money elsewhere. Houston-based Everyone's Internet, for instance, sells dial-up Internet for $10 but makes about half of its money on Web-hosting services. It plans to offer $20 wireless broadband early next year.

At 25, Dave has already tried his hand at three businesses, one of which spawned 550Access.

When he was 20, and a marketing major at the University of Houston, he joined a business that peddled telephone, satellite and security services.

"It was something I wasn't very good at," he said.

He followed that with a business that paid Web users to surf the Internet using a toolbar that displayed ads. Then the tech bubble burst, and ad revenues fizzled.

Dave then co-founded VIP PowerNet, which helps nonprofits raise money by contributing a percentage of the monthly fees to charity. But the business needed to be more competitive, so Dave launched subsidiary 550Access to sell low-cost Internet access to consumers, small businesses and municipalities that didn't have the funds or infrastruc-
ture to go with broadband.

And in 2003 the business started selling Internet service at the wholesale level to other small businesses under the name modempops.com, which also provides consulting and software to businesses looking to start their own Internet services without the fuss of setting up infrastructure.

Partner sees a success

Amid the growth, Dave took a break from school and is now finishing his degree online.

Dave won't disclose the revenues or income, but he says 550Access has maintained margins of 15 to 20 percent.

His mentor and silent partner, Dinesh Shukla, 50, runs a real estate business and says he says he got involved with Dave because he saw a chance to help the nonprofit community.

He's been pleasantly sur-
prised by the business's growth.

"In business, not everything is about making money. There's satisfaction and that's worth a lot to me," he said. "But 550Access has been doing well because we have a good product. And there is still a growth opportunity there."


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