BellSouth Mulls Speed Tiers, Pricing

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BellSouth Corp. is eyeing possible changes to digital subscriber line pricing and tiered speeds to better its chances in the broadband-services battle — but that might not include a price drop in line with its Baby Bell peers.

At the mid-year mark, the Atlanta-based regional Bell operating company is ahead of its projections for DSL growth, claiming 1,122,000 subscribers. Despite the strong numbers, an ever-fluid competitive scene has BellSouth looking at some key product tweaks for the second half of the year.

Fellow Baby Bells Verizon Communications Inc. and SBC Communications Inc. caused a stir earlier this year when they disclosed plans to drop residential DSL price to $34.95 — some $10 less than what most competing cable-modem providers charge.

But while BellSouth wants to fuel growth for its DSL business, following suit may not be in the cards, according to Michael Bowling, vice president of broadband marketing.

"Associated with that, we are really seeing the pricing actions of the market and we're still keeping our options open in that sense," he said.

"But one of the key tenets of the way we are looking at the broadband and competitive market is going beyond just price in terms of our overall value proposition."

Nevertheless, BellSouth is considering two possible changes to its DSL business by the end of the year. That includes the idea of a tiered service offering, "rather than just dropping your core product," Bowling said.

The tiering options BellSouth will consider include budget DSL and a higher-bandwidth offering.

"We're looking at both, and in all honesty both make sense," Bowling said. "For instance, gaming is a key application that I think is starting to, if not already, drive broadband, so looking at both — for gaming with the higher speed and then just some of the people more interested in dial, with an entry-level broadband that could go at the lower speed."

The end goal is to give DSL the widest appeal to BellSouth's potential broadband customer base.

"If you think about it, even with gasoline they've come up with three grades of gasoline, depending upon what the end user's needs are, and that's one of the things that we are really focusing on — understanding the end customers' needs," Bowling said. "Are they a high-, medium- or low-needs customer, from a broadband perspective?"

The second change BellSouth is mulling is varying its DSL pricing in local markets, where competitive factors can diverge widely.

On a related note, Bowling said there hasn't been much change in former AT&T Broadband markets now that they are under Comcast Corp.'s management.

"I haven't see a significant difference in terms of their operations," Bowling said. "I don't think Comcast has been as aggressive in Atlanta on the telephony side. That's probably the only thing I've noticed so far."

Other additions under investigation include beefing up e-mail for storage and the number of mailboxes, Bowling said. And by the end of this month, there are plans to take BellSouth's home-networking service to full deployment in its territories.

"We've got those products out there today, but not in our largest distribution channel," Bowling said. "That is significant progress for us."

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