Verizon Communications will 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, the New York Times reported.
Verizon’s $14.95 service, which uses digital subscriber line (DSL) technology, requires that customers sign a one-year renewable contract. It operates at top speeds of 768 kilobits a second— about 10 times the speed of a typical dial-up Internet connection. However, its speed is only about a fourth that of Verizon’s main DSL service, which costs $29.99.
Comcast and other cable companies typically charge $39.99 or more for high-speed lines.
Unlike the SBC service, which is a promotional offering, the new Verizon service will be available indefinitely. The SBC service is, however, is twice as fast as Verizon’s new service.
The 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 DSL 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 DSL 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.