Bell Atlantic Corp. launched high-speed-data services last
week on the premise that it can succeed where other telcos have so far failed in making
ADSL a threat to cable.
The last of the regional Bell operating companies to
introduce asymmetrical-digital-subscriber-line services commercially, Bell Atlantic got
its three-tiered, consumer-targeted "Infospeed" service under way in two cities
where cable has yet to launch high-speed services: Washington, D.C., and Pittsburgh.
And the telco targeted other areas for launches early next
year, including Boston and New York, which are largely unserved by cable data, as well.
"By the end of the year, we will pass close to 2
million households," Bell Atlantic retail-services group president Bruce Gordon said,
also naming Philadelphia and northern New Jersey as launch sites.
But while Bell Atlantic will have most of its initial
markets to itself, it won't be long before it faces cable competition in Pittsburgh,
New York and Boston.
Tele-Communications Inc. has already launched @Home
Network's data service in three towns outside of Pittsburgh, and it is progressing
with ongoing launches that won't be influenced by Bell Atlantic's plans, TCI
spokeswoman Katina Vlahadamis said.
*Home is also slated to launch in Boston in the near
future, over Cablevision Systems Corp.'s network.
New York is a "top priority in '99" for the
Time Warner Cable/MediaOne Road Runner joint venture, Road Runner spokeswoman Sandy Colony
said.
"We're moving ahead at our own pace, regardless
of what Bell Atlantic does," Colony said, adding, "No one wants to rush a
launch."
Bell Atlantic is taking several steps beyond what other
telcos have done to make ADSL consumer-friendly, including price breaks for customers who
give up cable-data service for Infospeed.
But it was clear that the telco faces the same fundamental
challenges that other Baby Bells are facing with the technology, starting with its
coverage limitations and its relatively high costs.
When packaged with Internet access from Bell Atlantic.net
and a customized version of the Snap portal service, from the joint venture by CNET and
NBC, Infospeed costs $59.95 per month for access at "up to" 640 kilobits per
second; $109.95 for up to 1.6-megabit-per-second access; and $189.95 for up to 7.1 mbps.
During what officials termed its "promotional
period," the company will charge $99 for connection and $99 for modems, discounting
the latter by 50 percent in cases where the customer is changing out cable-data service
for Infospeed.
The company also said it will waive additional equipment
and wiring costs for customers who take the service from Bell Atlantic.net during the
promotional period.
"This is the most comprehensive ADSL announcement that
we've seen to date," The Yankee Group consultant Craig Driscoll said, noting
that the Bell Atlantic rollout had been "occupying the better part of my days."
For example, he said, the Snap portal, or user on-screen
gateway, gave Infospeed "the look and feel of a broadband service that can compete
head-to-head with broadband cable."
And, he added, Bell Atlantic's marketing campaign --
which included a point-of-sale tie-in with CompUSA stores and Compaq Computer Corp. --
suggested that the telco had done a better job of setting up for the battle with cable
than other telcos had.
But cable-data services -- at average download speeds of
1.5 mbps and monthly pricing of $40 -- "are faster and cheaper," Driscoll added.
The Yankee Group, he noted, has projected that there will be 7 million total
broadband-data households nationwide by the end of 2002 -- 4.3 million on the cable side
and 2.7 million taking ADSL services.
Asked at a Washington, D.C., press conference why consumers
would choose Infospeed over a faster and cheaper cable service, Gordon suggested that Bell
Atlantic could win the battle on the basis of offering a dedicated service that provides
consumers with a choice of Internet-service providers, rather than a shared service.
He also pointed to the telco's presumed standing as a
more reliable service provider than cable. But Gordon acknowledged that Bell Atlantic may
have to rethink its pricing strategy.
"We're going to pay close attention to what our
customers tell us and to the competitive market conditions and do whatever we need to be
the market-leader in home-based connectivity," Gordon said.
Like other telcos, Bell Atlantic is limited to marketing
services largely on a one-to-one basis -- via canvassing and direct mail, with some online
promotions also slated -- due to the limited availability of service in its launch
markets.
The telco provisioned only about 100,000 lines -- extending
from seven central offices in Washington and Pittsburgh, combined -- for ADSL connectivity
at launch, with the total expected to go to 500,000 by month's end, Bell Atlantic
spokesman Larry Plumb said.
Moreover, only customers within a certain line distance of
the central office will be able to access service at the specified speeds. In the case of
640-kbps and most 1.6-mbps connections, the distance limit will be 12,000 feet, while for
7.1-mbps connections, it will be in the range of 8,000 to 9,000 feet, said Mark
Wegleitner, vice president for new-service technologies.
These limits prevent customers served by digital-loop
carriers from getting service, officials acknowledged. Bell Atlantic has a larger base of
DLCs -- which connect remote areas to central offices via high-speed copper or fiber links
-- than most telcos do. But it expects to have ADSL equipment suited for DLC terminals by
sometime next year, officials said.
Unlike other telcos, Bell Atlantic has set up an online
on-screen provisioning interface that will immediately tell customers whether they are on
a line that qualifies for ADSL and which types of ADSL they can get, said Pete Castleton,
Bell Atlantic's director for data products.
"We think that the key piece that differentiates Bell
Atlantic's rollout from those of other telcos is that we have started with a strong
foundation that covers all of the areas that are essential to making this a successful
consumer service," Castleton said.
That foundation includes an ISP-partnership program that
offers financial incentives to ISPs with customers that stay with Infospeed longer than 60
days. The basic price to the ISP for the 640-kbps service is $39.95.
Despite Bell Atlantic's conservative, solidly grounded
approach to ADSL service, it remains to be seen how well it will do in competing with the
more experienced Road Runner and @Home operations, Driscoll said.
"Bell Atlantic has taken a step in the right
direction," he added, "but it's not going to clean cable's clock
anytime soon in many of these markets."
