Verizon Looks To Grow DSL By Giving It Away

Landline Subscribers Who Order Online Are Eligible For Six Months Free Service

By Todd Spangler -- Multichannel News, 8/28/2008 11:50:00 AM

Verizon Communications, which posted a net loss of 133,000 DSL lines in the second quarter, is looking to fire up interest in the copper-based broadband service with a promotion offering six months free to customers who also subscribe to its voice service.

Through the end of October, Verizon will make DSL service at 768 Kbps, 3 Mbps or 7 Mbps available to new high-speed Internet customers, whether they have landline service now or order the two together, free for the first six months.

Prices range from $19.99 per month for 768 Kbps, $29.99 a month for 3 Mbps service and $42.99 a month for 7.1 Mbps service. However, the modem is not free and an activation fee applies. In addition, customers must place the order online and commit to a one-year contract.

Verizon is offering the six free months everywhere it sells DSL, a footprint that covers 33 million homes in 24 states, or about 80% of the telco’s total residential base. It introduced the offer Aug. 18.

Pali Research media analyst Rich Greenfield called attention to the Verizon DSL promotion Wednesday in a research note, which he titled, “DSL So Bad, It's Now Free For Six Months.”

“We suspect the aggressive promotion is being driven by a weak start to Q3 DSL net adds (which could bode well for cable stocks near-term), with a goal of regaining market share in Q4 and into 2009,” Greenfield wrote, adding: “Verizon is clearly not giving up, as evidenced by these price cuts.”

Verizon’s net decrease of 133,000 DSL-based Internet connections for the quarter ended June 30 was more than offset by 187,000 net new FiOS Internet customers.

Verizon Telecom director of media relations Jim Smith said the program is “not a desperation move but a campaign to introduce new customers—dial-up or cable modem—to this versatile, powerful service.”