Before 1998, getting a landline telephone line in Brazil was like buying a property. You declared it on your income tax, rented it to third parties, and resold it for a profit. The Brazilian telecommunications infrastructure had been frozen for decades.
In April 1997, a line cost R$1,200, equivalent to months’ salary for most families. When the privatization of Telebrás finally happened, in July 1998, the real push for the internet to become a mass reality in Brazil began to take shape. The commercial internet already existed, but now millions of Brazilians had the basic prerequisite to connect at home.
In addition to the possibility of a telephone line at a much lower price, a simple piece of software, distributed on CDs included in magazines, marked the lives of millions of Brazilians: the dialer. These programs automated network configuration, eliminated the need to know TCP/IP protocols or enter DNS addresses manually. You installed it, clicked “Connect” and waited for that unmistakable noise. In this article we will remember some of the dialers that were very successful in Brazil, but first, we need to understand a fundamental point!
The economic model that no one really understood
Brazilian dial-up internet had a peculiarity that confused even those who used it every day: how on earth could iG be free without charging a monthly fee? The answer was in interconnection engineering — and it became the case of Anatel and Cade in a few months.
When you dialed the provider’s number, you were technically making a local call. The fixed operator (Telefônica, Telemar, Brasil Telecom) charged the subscriber’s pulse, but, due to interconnection rules, it had to pass on part of this revenue to the network where the call ended, normally an operator partner with the free provider. iG, iBest, Terra Livre and company started to live on this minutes: the longer the user stayed connected, the more money came in. That’s why dialers redialed themselves when the connection dropped and filled the user with services that encouraged long sessions — chat, radio, games, portals full of clicks.
This created the “Madrugadão” phenomenon. The peak of Brazilian internet traffic was not at 8 pm — it was at 12:15 am, when millions of people “suffocated on the web” simultaneously after midnight. Telephone exchanges were collapsing. The “line busy” signal was so common that you needed 10, 15 dialing attempts before you could get in, especially on weekends.
In March 2000the model had already become a public fight. In the free internet forum organized by Cade, associations of paid providers accused telcos of an “incestuous relationship” with their own free providers and warned that revenue sharing would be the main source of income for these players, expelling anyone who did not have an operator behind them from the game. Anatel responded that, if a concessionaire shared revenue with a provider, it would have to do so in an equal manner with everyone, in theory, opening the door for competitors from iG and Terra to also access this money.
Cade, in turn, began to analyze whether there was predatory pricing in this arrangement. At that time, more than two dozen mergers were already being processed involving Terra Networks, Nutec/ZAZ, PSINet and others, in a market in which Telefónica had purchased Terra and Telemar and Tele Centro Sul had just entered iG’s capital. In other words: while the user was celebrating “free internet”, the regulator and competitors were already seeing a heavy fight for vertical integration between operators and portals — and the real risk that the small ones would be wiped off the map.
The dialer war
On January 9, 2000, iG (Free Internet) went live and detonated the market. Providers such as UOL, Terra and AOL charged monthly fees that, adjusted for inflation, represented a significant portion of the salary. iG offered access without a monthly fee — just the cost of the pulses.
Nizan Guanaes’ marketing campaign made history. The mascot — a white West Highland White Terrier — appeared since launch and became an instant celebrity. The dialer was colorful, intuitive, friendly, with a red logo (on purpose). Commercials showed the little dog “making things easier” for people. In two months, iG already had 1 million registered email accounts
Nizan had a visual plan for the business: the logo was red because the company operated “in the red” (loss). When it became profitable, it would turn blue. And when it really made a lot of profit, it would be green. In 2001, when iG started receiving payments from telephone operators for the traffic generated, the company finally made a profit — and the logo turned blue. The green phase never arrived.
The market reaction was immediate. iBest, born from the award that recognized the best Brazilian websites, launched its provider in 2001 using Brasil Telecom infrastructure. Your difference? Technical stability and a loyal community that “wears the shirt”.
In 2002, Pop arrived — and with a different proposal. Created by former Brasil Telecom executives (Sérgio Creimer, Roberto Almeida and Adriano Campos), the provider received R$10 million in investment from Inoweb, Merrill Lynch and GVT (15%). The structure was lean: just 10 employees. The goal was ambitious: 500 thousand users in the first year, operating in 26 cities in the center-south such as Porto Alegre, Florianópolis, Curitiba and Goiânia.
Pop bet on aggressive technical differences. It offered 100 MB of space for personal data, half for emails. There was a tool that unified messages from several email accounts into a single mailbox. The installation CDs came with OpenOffice, a free office suite that few Brazilians knew about. And the business plan was bold: 60% of revenue would come from e-commerce through a virtual store that would sell “everything” with national delivery.
Terra launched “Terra Livre” to avoid losing users. UOL resisted longer, arguing that its journalism and chat rooms justified the monthly fee, but ended up partially giving in.
In July 2003, the telecom giants finally officially entered the free ring. Telefônica launched iTelefônica and Embratel launched Click21.
Click21 popularized the “internet accelerator”, a compression proxy that reprocessed lower quality images to create the illusion of speed. It worked to browse news sites; it was useless for downloads.
In this July 2003 test by Folha de S.Paulo a comparison put iG, iBest, iTelefônica and Click21 head to head using two different modems (IBM Data and PC Tel Platinum V9.0). The results showed a tight technical draw: speeds ranging between 49.2 and 54.6 Kbps, all very close to the theoretical ceiling of 56 Kbps of the V.90 standard. The IBM Data modem was more consistent, delivering 50.6 Kbps on almost every attempt. PC Tel reached 52 Kbps on 80% of connections, with peaks of 54.6 Kbps on Click21 and iBest.
Telefônica tried an aggressive commercial move: it offered a 15% discount on telephone pulses for anyone using iTelefônica, regardless of the time of day. It was a way of using its own telephone infrastructure as competitive bait. But it was already too late: ADSL broadband was arriving with a bang, and the entire dialer model only had a few years to live.
AOL: the $200 million tragedy
If there is a story that summarizes the disconnect between Brazil and the United States at that time, it is the failure of AOL.
In 1999, America Online formed a joint venture to dominate Latin America, investing US$200 million. The strategy was simple: reproduce in Brazil what worked in the USA: installation CDs distributed en masse.
A year earlier, Aleksandar Mandic, founder of one of the country’s first providers, nailed it in an interview that AOL was arriving too late in Brazil and that it would only worry if the company joined brands like UOL or SOL, from SBT, which already had tens of thousands of subscribers. In the same vein, the executive director of ZAZ described the market as “a nightmare”, with more than 400 active providers, 2.1 million users and local media groups much more deeply rooted than any external player
AOL flooded the country. CDs came in magazines ( Veja, Exame, Info ), Sunday newspapers, mailboxes, even cereal boxes. Millions of CDs pressed. The Brazilian turned it into a coaster, decorative item, etc.
But the problem wasn’t just marketing saturation. It was the product itself. AOL’s software required installation via CD and worked like a “walled garden”: you couldn’t browse the open web by freely typing URLs. Instead, it used keywords within AOL’s proprietary browser to access areas of content curated by the company — news, forums, chats, email, all within AOL’s closed ecosystem. It was like a parallel, controlled internet.
Worse: the first CDs distributed had bugs that crashed computers or changed system settings without warning.
The operation bled money for seven years. In 2006, AOL closed its activities in Brazil, transferring the few remaining subscribers to Terra. It was the biggest market misreading in the history of Brazilian technology.
And in 2025, the story came to a definitive end: AOL announced that it had completely shut down its dial-up internet servers, officially ending the last operational remnant of the modem era.
The transition to a new era
Broadband began to kill dial-up internet in Brazil around 2004-2005, when ADSL (Velox, Speedy, BrTurbo) became widespread. The advantages were unbeatable: initial 256 kbps (four times faster than the theoretical 56k) and, most importantly, a free telephone line.
Did you live through this era of dialers? Comment below your memories of the nostalgic era of dial-up internet.
Source: https://www.hardware.com.br/artigos/internet-discada-relembre-discadores-brasil/
