Verizon to Sell High Speed Net Connections for $14.95 a month

[David Farber <dave () farber net>]

Begin forwarded message:

From: William Law <law () tc cornell edu>
Date: August 24, 2005 12:50:54 AM EDT
To: dave () farber net
Subject: [ip] Verizon to Sell High Speed Net Connections for $14.95 a  
month


For IP if you wish

From http://www.nytimes.com/2005/08/24/technology/24internet.html
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Verizon to Sell High-Speed Net Connections for $14.95 a Month

By KEN BELSON and SAUL HANSELL
Published: August 24, 2005
Verizon Communications said yesterday that it would start selling
high-speed Internet connections for $14.95 a month to attract customers
with slower dial-up connections and to compete with cable companies.

The company also formed a marketing alliance with Yahoo, which has
created a Web portal for Verizon customers. This largely displaces a
similar deal Verizon had with Microsoft for MSN to be its Web portal.

Verizon's move follows a similar step by SBC Communications, another
Bell company, which announced in June that it would sell broadband
access for $14.95.

Verizon's $14.95 service, which uses digital subscriber line, or D.S.L.,
technology, requires that customers sign a one-year renewable contract.
The new service allows users to download e-mail, pictures and other
information at top speeds of 768 kilobits a second, or about 10 times
the speed of a typical dial-up Internet connection. However, its speed
is only about a fourth that of Verizon's other D.S.L. service, which
costs $29.99.

Comcast and other cable companies typically charge $39.99 or more for
high-speed lines.

"Every dial-up customer we convert to D.S.L. takes one customer off the
table for cable modem," said Bob Ingalls, president of Verizon's retail
markets group. "We have a price for every budget."

Unlike the low-cost SBC service, which is a promotional offering, the
new Verizon service will be available indefinitely. The SBC service is,
however, twice as fast as Verizon's new service.

At $14.95 a month, the low-priced plans from Verizon and SBC are cheaper
than most dial-up services offered by AOL, Earthlink and others.
Although those companies now offer bare-bones dial-up plans for as
little as $9.95 a month, more customers are expected to drop their
dial-up for high-speed plans in the coming years.

The Bell companies are eager to sign up new D.S.L. customers to stem the
decline in local phone customers as more of them move to cellphones and
Internet-based phone services.

Verizon and SBC are also preparing to sell video programming over their
high-speed data lines in the coming year, so they want to attract more
customers to their entry-level broadband services in the hopes that they
will later upgrade to the faster D.S.L. and fiber optic connections
needed to watch television.

Last year, 36 million American homes, or 52 percent of all homes with
Internet access, used dial-up services, according to SG Cowen, the
brokerage firm. That percentage is expected to drop to 40 percent at the
end of 2005. Cable and phone companies are expected to add eight million
broadband subscribers this year.

Verizon hopes that Yahoo's popular portal and its range of services like
e-mail and instant messaging will help attract first-time broadband
customers.

Yahoo has had a similar partnership with SBC for several years.

By working with phone companies like Verizon and SBC, Yahoo has direct
access to millions of customers and can offer them a myriad of other
services. As the Bells expand into television, Yahoo hopes its tight
relationship with those providers will give it new distribution channels
for its video content and help it become a search engine for television
shows much as it is now for Web pages.

Shares of Verizon rose 11 cents, to $33.24. Shares of Yahoo fell 9
cents, to $33.11.


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