Dial-up is the cash cow of the broadband world, despite carriers irritation at providing it: For landline companies, dial-up service uses a heavily tariffed voice phone line that occupies a circuit, and just means more copper that they have to service. Carriers would rather have you switch to DSL or fiber. The logic of fiber makes sense--triple play or more services through one new pipe increasing annual revenue per user (ARPU)--but DSL's logic may be less explicable. It's the same copper used for dial up or DSL, but the phone company can sell you more services over DSL, and it takes you off a tariffed service and onto an information service that's not regulated. (AT&T is subject to certain provisions due to their merger on their DSL and data services, but those sunset in a few years.)

The upside of dial-up for carriers is that the margins are pretty high, as the cost of providing dial-up service is a fraction of what it was years ago. I have heard that it's as low as a few dollars a month in actual costs.

AT&T announced that starting Dec. 1, it's raising the price of all its dial-up Internet service: $9.99 per month plans go to $15.95, $15.95 to $22.95, and new service is $22.95 per month. EarthLink, which has told me what a cash cow dial-up is, charges $9.95 for three months, then $21.95 per month, or $14.95 per month with a 1-year contract, plus a $30 Amazon gift certificate. Juno and others charge as little as $10 to $15 per month, typically with fewer hosting services or other limits, none of which are particularly relevant in the era of Google GMail. AOL charges $9.95 for unlimited dial-up, and includes 5 GB of storage from its Xdrive subsidiary.

AT&T knows better than anyone who it has by the bollocks. It's jacking up prices knowing that there's a set of people who need Internet access who can't qualify for DSL, and they'll simply either extract more money for those people, or they'll flee to other providers who charge less and that will reduce AT&T's management and billing burden, and they might come out even there. They'll also pick up reluctant DSL convertees, who will sign up for the hard-to-find $10/month DSL package that's faster than dial-up, or a higher-speed offering.

In any case, AT&T comes out ahead: either more profit from a service that's cheaper to provide; fewer customers for a service they'd rather not offer; or more broadband customers, which increases their take while reducing their network overhead.