As a dial-up user, it is very infrequently that I see this and it is usually associated with a dropped connection. When this happened it didn't pop-up for a short period of time but not several minutes.
If the alert is directly related to a dropped connection or you disconnecting, if you check the avast Log Viewer Warnings, Errors or Info you may see that even though the connection is dropped if the update checks are in progress, avast will continue to cycle through the servers listed within the servers.def file.
Since there are 80 servers listed it will try each in turn and find that it can't connect to the server and tries the next one in sequence, there will also be a pause to confirm it can't connect, so this could take some time before it eventyally reaches the bottom and pops-up the update error.
I don't think that it isn't recognising modem status, I don't think that having checked for a connection (that was present) it starts the update but it doesn't recognise the connection is down as I don't think it checks. This however, is speculation on my part, having established a connection exists, it doesn't check again.