News

Cincy Bell Intros Low-Cost ADSL

10/25/1998 7:00 PM Eastern

Cincinnati Bell Inc. has started an aggressive launch of
asymmetrical-digital-subscriber-line service in the Cincinnati area, beating both the
incumbent cable operator and the local Baby Bell to the high-speed-data punch.

Cincinnati Bell, long known for its aggressive stance in
just about every market that it enters, is not pulling any punches with its ADSL service,
called "Zoom." The independent telco is offering the service at prices that
nearly halve those of similar offerings from regional Bell operating companies.

Zoom is being offered at three speeds:
"ZoomSpeed," a 384-kilobit-per-second service for $29.95 per month;
"TurboZoom," a 784-kbps service for $59.95; and "HyperZoom," at 1.5
megabits per second, for $159.95.

In contrast, ADSL offerings from RBOCs across the country
can be as high as $60 per month for 384-kbps service and as much as $200 to $300 per month
for 1.5-mbps service.

Accessing an Internet-service provider is extra, usually
around $20 per month.

With the rest of the telephone world offering ADSL at
similarly high rates, how can Cincinnati Bell afford to price its service so low?
Apparently because it's a lot smaller than its RBOC brethren.

Libby Korosec, a spokeswoman for Cincinnati Bell, said the
pricing structure, particularly on the low end, was a result of already having the
switching infrastructure in place and wanting to offer the service at a rate that
consumers could afford.

Cincinnati Bell has a relatively small service territory --
12 counties in southwestern Ohio, five in southeast Indiana and 12 in northern Kentucky,
totaling 1.2 million access lines.

Craig Driscoll, an analyst for Boston-based
telecommunications-research firm The Yankee Group, said Cincinnati Bell's pricing
strategy is one of the most aggressive that he's seen to date.

"Probably the most significant is the low end,"
Driscoll said. "[The fact] that ADSL offerings to date haven't gone below $60
[per month] is a joke. People aren't going to pay 1.5 times more per month for what
they can get from a cable modem."

Driscoll added that past ADSL offerings from telephone
companies have been conducted more to test the waters from residential and business users
than to aggressively roll out service. Companies are still trying to decide whether they
want to commodity-price ADSL for consumer use.

"This announcement clearly positions [Zoom] as a
residential service," Driscoll said.

Although Cincinnati Bell does not include ISP service with
its ADSL offering, it is giving its initial customers a big break on equipment.

So far, Cincinnati Bell has signed on three local ISPs,
including its own "Fuse Internet" service, and it plans to add others in the
future.

As part of a special promotion, customers who sign up for
Zoom before Jan. 20 will receive free Cisco Systems Inc. ADSL modems, network-interface
cards and up to three phone microfilters -- worth a total of $500 -- as well as free
installation.

Also for a short time, ADSL customers will be able to
receive Fuse Internet service for $14.95 per month.

The telco is marketing Zoom primarily through its own Web
site and e-mail. However, the company said it will unveil another "interactive"
offering, in conjunction with Zoom, Nov. 5.

"At that point, you will see a much more aggressive
campaign," Korosec said.

Zoom is available to about 38 percent of Cincinnati
Bell's 1.2 million access lines. The company expects to make the service available to
85 percent of its customers by the end of the year.

One thing that Zoom won't have is competition.

Time Warner Cable, the incumbent cable provider in
Cincinnati, does not plan to deploy its Road Runner high-speed Internet service in that
city for another 12 to 18 months.

Jennifer Mooney, vice president of public affairs for Time
Warner in Cincinnati, said it's hard to speculate about the Zoom service without
seeing it first. But she added that Road Runner offers a large portion of proprietary
information and faster speeds -- up to 10 mbps -- which should make it highly competitive.

"We do believe that Cincinnati Bell is a formidable
opponent, as they have been in other business lines," Mooney said. "We recognize
that they will probably have a product out before we do, but we also believe that we will
be extremely competitive."

Chicago-based RBOC Ameritech Corp. has deployed ADSL in Ann
Arbor, Mich., and in some areas of Chicago, but it has no further deployment plans until
regulatory issues are clarified with the Federal Communications Commission, which is
expected sometime in February.

March