News

Bell Atlantic Targets Hub, Apple for ADSL Launches

3/28/1999 7:00 PM Eastern

Bell Atlantic Corp. will begin rolling out
asymmetrical-digital-subscriber-line services in Boston and New York next month -- the two
largest and most ambitious markets for the telco's high-speed Internet service to date.

So far, ADSL has not lived up to its potential, mainly due
to sluggish deployment schedules and the high cost of service.

Bell Atlantic's ADSL offering, branded
"Infospeed," may be able to break the mold, however, if it is rolled out
aggressively in New York.

Couple that with a previously announced deal bundling
Infospeed with America Online Inc. service -- slated to be rolled out this summer and
priced at around $42 per month -- and Bell Atlantic may be able to capture a significant
share of the market.

That AOL agreement would make Bell Atlantic's
"Personal Infospeed" service -- which offers speeds of 684 kilobits per second
downstream and 90 kbps upstream -- an upgrade option for AOL customers in the regional
Bell operating company's service territory.

But Bell Atlantic's success or failure will hinge on how
aggressive its rollout actually is and on whether it can get its pricing in line with
cable-modem service.

"Early penetration is important, but the most
important thing is appropriate pricing and creating the awareness that you need,"
said Andy Fuertes, an analyst with Allied Business Information Systems.

"If they continue to price at the level they are --
around $40 to $60 per month -- they're leaving a lot of room for someone to come in,"
Fuertes added.

Infospeed is currently available in Washington, D.C.;
Philadelphia; Pittsburgh; and northern New Jersey. The company would not release
subscriber numbers.

Ells Edwards, a spokesman for Bell Atlantic, said the
company plans to have more than 20 percent of its central offices in New York and Boston
ADSL-equipped by the end of the year, with more than three-quarters ADSL-capable the
following year.

Not only are New York and Boston Bell Atlantic's two
biggest markets: Both cities have high percentages of computer and Internet users. And
although Edwards did not want to reveal Bell Atlantic's marketing strategy for the
rollout, he said the company is confident that it will be successful in both markets.

"We will have an offering that, I think, is going to
attract attention in New York [and Boston]," he said.

Bell Atlantic is already facing competition for voice
services in the Boston market from MediaOne Group Inc. and RCN Corp.

MediaOne has been offering its own switched-local-telephony
service in 27 communities in suburban Boston since September, along with its
cable-television and MediaOne Express high-speed Internet service.

The data service passed the 100,000-overall-customer mark
last week. Telephony is available to about 300,000 MediaOne customers in the Boston area,
and the company hopes to double that footprint by the end of the year.

Boston is one of MediaOne's oldest markets for MediaOne
Express, and the company has enjoyed quite a bit of success in that market. But MediaOne
would not release subscriber numbers for individual markets.

RCN has been offering cable, Internet and telephony service
in Boston and surrounding communities since 1996. The company announced earlier this month
that it has expanded its reach in the Boston market to 500,000 homes.

New York cable providers Time Warner Cable (in Manhattan)
and Cablevision Systems Corp. have basically left telephony service to Bell Atlantic.

Cablevision has its own telephony subsidiary, Cablevision
Lightpath, but so far, that unit is primarily offering local telephone service to business
customers in Long Island, N.Y., and parts of Connecticut.

Bell Atlantic's lock on the Manhattan local telephone
market could change quickly, given the fact that Time Warner recently signed an agreement
with AT&T Corp. to offer AT&T-branded local telephone service over its cable
network.

Although Time Warner has not said where it plans to offer
telephone service first, it may have to accelerate its Manhattan plans, given the threat
of a Bell Atlantic bundled service.

Time Warner doesn't even offer its high-speed Internet
service, Road Runner, in New York yet. But those deployment plans could also accelerate
once Bell Atlantic's ADSL rollout beings there.

Sandy Colony, a spokeswoman for Road Runner, said the
company plans to roll out service in the New York area sometime this year. Although Bell
Atlantic will beat Road Runner to the punch in New York, Colony said, the company does not
believe that it is at a disadvantage.

"Given the chance, would we want to be first [in the
market]? Yes," Colony said. "But at least at the moment, we are not seeing [ADSL
providers] being able to match the price of cable, and they've had some trouble providing
the same breadth of service. Is it competition? Yes. Are we overly worried about it?
No."

Jim Wahl, an analyst who follows high-speed Internet
services for The Yankee Group, a research firm in Cambridge, Mass., said
cable-modem-service providers have little to worry about from DSL. He added that he was
skeptical about RBOC announcements on aggressive ADSL plans.

"It could go either way," Wahl said. "Bell
Atlantic has announced that they are going to launch this stuff, but the question is: How
strong and how quick [to market] is that competition going to be? There has been a gap
between press-release rhetoric and actual deployment. I don't think that the cable-modem
companies are scared of the RBOCs."

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