I don't recall it being that bad that late. Things may have been slower to develop in England than in the US.
I looked at the wayback machine and found snapshots of the Internet Chess Clubs starting in 1996. Here is a header from 1997
You have reached:
www.chessclub.com
The world's most active chess club.
Over 25,000 chess games played daily!
Internet chess records set on May 4, 1997: 2266 people logged in and 307 simultaneous games!
It looks like they were much better than your memory
Also it's quite likely the server I happened to find was something hacked together on a slow personal server.
I thought it might be amusing to compare memories of our first online chess experience.
In the mid to late 90s I bought my first modem (a 14400 kbit one) after first getting Internet access at work (using NCSA Mosaic for web access), and came across a web-based chess server while very slowly browsing the Internet using Netscape Navigator one evening. If I recall, there was exactly one other person on the server. We played one game. There was no time for any more, as the web page took about 1 minute to load each time (lots of small graphics, slow connection, probably inefficient software). It was quite an expensive game, as I was paying for the phone call. I cannot recall the result, but who cares.