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Alan Breznick
Escalating its battle with cable operators in the Northeast, Bell Atlantic Corp. will team up with America Online Inc. (AOL) to offer high-speed data service over the telco's copper phone lines, starting this summer.
The deal, the first of its kind, announced by the two companies last week, will allow AOL to offer Bell Atlantic's fast digital subscriber line (DSL) technology as a premium upgrade for AOL members in the telco's service area. Customers will pay around $42 a month for the high-speed AOL product, about $20 more than they typically pay for the online service now.
As a result, Bell Atlantic and AOL will heat up the competition for high-speed data subscribers in the lucrative Northeast region, running from Maine to Virginia. The two new partners will duel with such major MSOs as Time Warner Inc., MediaOne Group, Comcast Corp., Cablevision Systems Corp. and Cox Communications Inc., most of which have already introduced fast cable modems in such large Northeast markets as Boston, Baltimore, Philadelphia and New York.
The pact also fuels the growing rivalry between Bell Atlantic and upstart RCN Corp. a competitive local exchange carrier (CLEC) that offers bundled phone, cable and Internet service in New York, Boston and Washington and plans to expand to Philadelphia this year.
"This agreement is a great plan for us to go up against and beat the cable industry," said a Bell Atlantic spokeswoman. "We think it establishes us as the premier provider of data services to the home."
The regional Bell, which now offers DSL service to about 2 million homes passed, intends to extend its reach to 7.5 million homes by the end of this year and more than 14 million households by the close of next year. Plans call for expanding the service, now available in chunks of the Philadelphia, Washington, D.C., Pittsburgh and northern New Jersey areas, to New York and Boston this winter and Baltimore later this year.
The telco declined to disclose how many customers it's lured since launching its Infospeed DSL service three months ago.
For AOL, Bell Atlantic is providing what the online service hasn't been able to gain from cable operators-prime access to prospective high-speed data customers without extra fees. Bell Atlantic estimates that its dense territory of 23 million homes contains 4 million of AOL's 15 million members.
"It's an important advance in our commitment," said an AOL spokeswoman, who noted that the company is negotiating with a number of phone companies and cable operators for high-speed access lines. "This is not the last announcement."
Both companies declined to estimate how many customers they'll sign up for the DSL service.
Financial details of the arrangement were not disclosed last week. But the Bell Atlantic spokeswoman said AOL will make "a bulk purchase" of the telco's DSL capacity and then sell the service to consumers. Customers will pay one monthly bill to AOL.
"This is actually a major purchase agreement," she said. "They're buying something from us and they're packaging it."
AOL and Bell Atlantic will co-market the high-speed service to phone customers, possibly with both companies' names on the offering. The two will also team up to offer special online content and features to high-speed subscribers, including links to a customized Bell Atlantic Web site, premium Bell Atlantic merchandise and personalized Web pages.
While not as fast as ultra-quick cable modems, the DSL service will allow subscribers to surf online at speeds up to 640 kilobits per second, about 10 times faster than today's speediest conventional modems.
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