A New Way to Compete with Cable

Across the U.S., cable and DSL broadband are roughly the same price, but cable offers greater bandwidth, giving it an advantage in the race for subscribers. Cavalier Telephone is out to change that with a new $50 per month bundle that combines SDSL with unlimited local calls.

by Alex Goldman ISP-Planet Associate Editor [August 8, 2003]

Since July 31, 2003, Richmond, Va.-based CLEC Cavalier Telephone has been offering a DSL bundle. Users get 960 Kbps SDSL. The package also includes a local calls and a full bundle of calling features (caller ID, voice mail, etc.), and 5 cents per minute long distance. The total price of the bundle is $49.95 in Maryland, Pennsylvania, and Virginia, and $79.95 in Delaware.

We asked Andrew Lobred, Cavalier's head of marketing and product management, how the company was able to offer these prices. He said, "it's all about reducing the embedded costs of broadband. We're using Rate Adaptive DSL (RADSL) equipment and ADSL 2, which has low power modes. We're provisioning with Paradyne."

The CLEC buys access to UUNET and AT&T backbones. The facilities-based company (network map available here) also provides wholesale services to cellular phone companies.

Cavalier already has a significant customer base. It boasts over 30,000 business customers and over 100,000 residential customers of its suite of local, long distance, dialup, and DSL. Those customers have over 250,000 voice lines. "We had 10 percent growth in July in residential DSL," noted Lobred, "and that was before the new offer."

When the company reported quarterly results on July 29, 2003, it claimed to have added 2,000 business customers and 12,000 residential customers in the previous three months. The company also reported positive cash flow of $3 million, but did not disclose bottom line profit or loss numbers. The company is privately held.

DSL performance may further improve sales if Cavalier can deliver higher than expected download speeds. The company is hoping to use RADSL and ADSL 2 technologies to provide download speeds of up to 12 Mbps, depending on network load (making the promised speed a minumum download speed, not the maximum, as is often the case).

The company's promise of 960 Kbps symmetric service is far more bandwidth than the industry standard package of 768 Kbps/128 Kbps but a slightly lower download than the industry standard premium package of 1500 Kbps/256 Kbps.

The company claims to be optimistic about its future. In a public statement, Robert Keane, President and COO of Cavalier, said, "Eliminating our reliance on third-party carriers significantly increases our network capacity which allows Cavalier to better serve customers with enhanced voice and data products. In anticipation of the completion of this upgrade, Cavalier Telephone recently lowered its residential voice and DSL prices. Cavalier now has one of the most state of the art networks in the region, while at the same time remaining one of the most competitively priced."

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