DSL Prime: DSL Improves

AOL may have bowed out of broadband, but around the world, naked DSL is bringing a whole new round of competition.

by Dave Burstein DSL Prime [March 1, 2004]

Verizon Wholesaling Full Service Bitstream Access
EarthLink can now sell DSL throughout the Verizon territory, reselling a package that includes Internet connection with DSL transport. EarthLink will no longer have to turn away customers in Verizon territories EarthLink does not directly connect. Verizon gains the possibility of selling EarthLink customers Verizon's soon to come movies on demand and other offerings.

EarthLink now has the challenge of differentiating their DSL from Verizon. Gary Betty's official comment "With EarthLink High Speed, customers have access to a compelling line of exclusive protection tools that enhance their Internet experience by controlling spam, pop-ups and spyware," is not persuasive. Verizon is offering most of the same services. Brinton Young elsewhere listed EarthLink's targets as "disgruntled AOL and other ISP customers known as 'switchers' who are looking for an alternative, 'newbies' looking to get on the Internet for the first time and those who are looking for high-speed services at reasonable prices."

DSL Reports BBR Awards—DSL quality catching cable.
Justin Beech writes "I don't think we could launch these awards two years ago because too few big players would meet the standard. It has also been interesting to watch the cable ratings descend gradually to meet the rising ratings from customers on DSL lines. Will the lines cross, or merge? Stay tuned. :)"

The Gold Awards went to smaller companies SONIC.NET, DSL Extreme, TransEdge and Illinois wireless service DLS Internet, as well as Cablevision's Optimum Online and EarthLink's cable service. Silver went to Bell Canada, BellSouth, Covad, CYBERONIC, Speakeasy, and Sprint; Cox, Cogeco, RoadRunner, Shaw and Insight on the cable side.

Notebaert: Everyone will offer "N-ed" DSL
Adding 4,000 remotes
"I'd rather keep the DSL revenue when a customer switches to wireless and drops their landline. I know I'll lose a few phone customers, but may of them are $15 minimum lines anyway. DSL is a profitable service for us. We're happy to make wholesale deals as well, and I recently visited EarthLink in Atlanta and had interesting talks. If they want to buy the 'n-ked' line, we'll sell that too. "

"Our new remotes are all fiber fed, so we'll be able to offer 6 Mbps, " Notebaert added. Qwest is currently at 45 percent penetration, an improvement over last years 30 something, going to 60 percent the end of 2004. Capex is very tightly controlled at about $2B, a figure Joe Nacchio cited as baseline maintenance for the company. DSL was the only growth investment discussed by either Notebaert or CFO Schaeffer.

Correction: Qwest is charging $40 for "n--ked DSL" with a basic ISP service, per Richard Notebaert. I should have double checked that the price I reported last issue, $33, was a fair comparison to the $29.95 (one year contract) of SBC, $35 of Verizon, or the $40 to $50 of BellSouth. In the U.S., DSL prices are generally quoted with ISP included. Today's press release was more accurate, pointing to a $49.95 price with MSN.

Telscape wants California "n-ed"
Shutting down DSL if the customer goes elsewhere for phone service is obviously anti-competitive, and three states have ordered BellSouth not to do it. Mike Bazeley in the San Jose Mercury points out "The only option at this point is for consumers to sever their phone-company ties completely and get broadband from a cable company. But is that what the phone companies really want?" SBC's response was " The bottom line is our voice line is our flagship. It enables us to provide DSL. The two go together.'' Bazeley included my explanation for the telco reluctance "They'd rather lose DSL than the voice lines. Local phone service is one of the most profitable services on earth.'' John Hodulik agrees, The Bells are sacrificing ARPU to keep local customers. Ron Dykes, BellSouth s CFO summed it up at the end of the day, the game we play is access. It was a thrill to be in the Merc; I get their exceptional e-mail news twice every morning. Telscape, a Latino oriented voice provider, is taking the issue to the California PUC. Loretta Lynch's board would presumably rule for the consumer on this one, but a California insider doubts the governator's new appointees will stand up to the industry.

Copyright 2004 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.