In its $4.4 billion deal to buy AOL, Verizon isn't just picking up Huffington Post and TechCrunch — they are also getting more than 2 million dial-up customers.
And those dial-up customers are the most profitable part of the company.
In the 1990s, AOL helped ease millions of Americans online with a massive amount of free trial CDs aimed at hooking users into its walled garden version of the Web. As faster broadband service became available, dial-up subscriptions fell quickly.
But AOL still has 2.16 million dial-up customers in the U.S., according to the company's first-quarter earnings report this year. And they bring in a shocking amount of money — an average of nearly $21 per month in revenue per subscriber.
Not all of those users are actually paying for the service: Those figures include "subscribers participating in introductory free-trial periods and subscribers that are paying no monthly fees or reduced monthly fees through member service and retention programs," according to the company's earnings statement.
In Securities and Exchange Commission filing from last week, AOL said its average subscriber has been paying for dial-up service for almost 15 years.
John Walters, an 81-year-old retired college administrator who lives in Manhattan, Kan., told The Post he’s been a paid AOL subscriber for even longer than that – and is happy with his service.
“There are some things that could be better, but I don't have a lot of experience with other services and I have a hard time comparing them,” he said.
Walters and his wife use their Internet connection to look things up online and keep up with friends – including on social media sites. “My wife uses Facebook – I don’t, but I’m on LinkedIn,” he said.
For around $60 per year, Walters said he gets unlimited dial-up service and access to other features, including troubleshooting and digital security software.
AOL's subscriptions come in different packaged tiers with other services that seem geared toward older or less tech-savvy users — such as tech support, computer security services and even digital estate planning help.
However, for Walters, the biggest draw is familiarity: There are a lot of features built into the AOL interface he likes, and he’s “too much of a creature of habit” to make a switch – although he has considered changing before. There are broadband providers in his area, and Walters already has cable television through AT&T.
But for some AOL subscribers, dial-up may be their only option. Millions of Americans, many of them in rural areas, lack access to wired high-speed Internet access in their homes, according to the Federal Communications Commission.
Still, AOL's dial-up subscriptions are on the decline — falling 11 percent in the first quarter compared to the same period last year, according to the earnings statement. But the company is squeezing more out of each subscriber — with revenue actually up 7 percent per user compared to this period last year.
While other parts of the company like advertising are on an upward trajectory, AOL's dial-up packages are currently the single most profitable part of the company. "Clearly the subscription business has a lion share of the profitably, but the other segments are growing rapidly," said AOL vice president of communications Cherie Gallarello.
It's unclear what exactly will happen to these subscribers in the wake of the acquisition: Verizon stopped offering dial-up to new subscribers in May 2012, according to its Web site — although existing subscribers could continue their service.
Verizon spokesman Robert Varettoni told The Post the company has "very few dial-up customers remaining" and "nothing to announce regarding AOL’s dial-up customers."
AOL said its dial customers don't have to worry. "AOL will continue to provide these services to its members. We don't anticipate any changes with our email addresses now or in the foreseeable future," said AOL's Gallarello.