BellSouth to offer Premium DSL service, projects 2M customers in 2004

BellSouth will add a third tier to its DSL service in 2004, adding a premium service grade with speeds up to 3 Mb/s to compliment its FastAccess and FastAccess Lite products.

The new service will give BellSouth one of the most diversified consumer DSL portfolios, offering throttled service at 256 kb/s and standard service at 1.5 Mb/s. BellSouth ended the third quarter with 1.3 million DSL customers. However, with the new service offerings and a redoubled marketing effort in 2004, the company is projecting 2.2 million customers and $1 billion in annual DSL revenues, said Bill Smith, BellSouth chief technology officer.

At a Lehman Brothers investor conference today, Smith also hinted that BellSouth might further tier its service, saying the Bell company has the capability of providing a 5 Mb/s service to half of its service base using existing ADSL technology.

“We’re pretty fortunate we have a strong a fiber optic network,” Smith said. “We have 45,000 fiber-fed remote terminals. Consequently we have short copper loops.”

Smith said that BellSouth’s research has shown the main cause in churn among its DSL customers is cost. The more options it gives customers, the more likely it is to retain them, Smith said. But while many carriers are merely dropping prices on their DSL offers, BellSouth has been highly competitive in many of its markets charging a premium rate of $40-$60 per month. The new pricing structure allows price-sensitive customers to drop down to a lower cost service instead of disconnecting, and high-end customers to upgrade to a more reliable, more feature rich service thus generating more revenue.

In addition to the different tiered DSL services, BellSouth is testing a bandwidth-boosting service for its lower-speed customers. When using a paid BellSouth content service such as its movie-on-demand service provided by Movielink, a DSL line would use the entire capacity of the copper loop for the duration of the download, effectively adding a “turbo” button to ever customers DSL service, Smith said.