The bundled lure

Verizon's free Internet offers a sign of things to come Verizon Communications' decision last week to offer six months of free Internet access as part of a wireline/wireless package portends future bundling trends for Verizon and other major telecom players, according to Verizon officials and analysts.

Through the deal, 18 million Verizon residential customers in 21 states can receive free Internet access - via a dial-up account and Verizon's Mobile Web offering - until Memorial Day by subscribing to a digital calling plan of more than $29.95 per month by Nov. 30.

This is the first time Verizon bundled its wireline, wireless and Internet offerings since the company was established through this summer's merger between GTE and Bell Atlantic, said Jody Bilney, president of Verizon's consumer group. But it won't be the last such offer, she said. "This is the first indelible sign of who we are and what we intend to become," Bilney said. "This is not your father's telephone company."

Incentives such as free Internet may be the best way for carriers to jump-start subscriptions to wireless Web services, said Jeffrey Rickard, wireless analyst for Current Analysis.

"If you're getting voice service now, how willing are you to pay for something that's unknown? This way, you can try it for free," Rickard said. "Suddenly, Memorial Day hits, and you've got to pay the extra money because it's part of your life now."

Such bundling as a marketing strategy emphasizes the competitive advantages of large, diversified carriers such as Verizon - including the ability to offer customers multiple services that appear on just one bill, said Peter Meade, managing partner at TeleResearch.

"If you can offer wireline, wireless and Internet, go ahead and compete on that level," Meade said. "But who can compete on that level? The list is pretty small. If providers the size of Verizon don't do that, I think they're being short-sighted."

Indeed, consumers can expect more offers of a similar nature from Verizon, Bilney said, although regulations prohibit the company from altering local access rates. Asked if long-distance service may one day be part of a Verizon bundle, Bilney noted that the company is only eligible to provide long-distance in New York within its territory. However, she did not dismiss the possibility in the future.

"We will continue to use the resources of all our business units to address the needs of our customers," Bilney said.

If Verizon is allowed to offer long-distance services, the carrier can regain control of Internet backbone firm Genuity - formerly GTE Internetworking - in accordance with regulatory conditions included in the GTE/Bell Atlantic merger. At that point, Verizon will be positioned to offer a number of intriguing bundling combinations for business and residential customers, Meade said.

"Once that happens, then it's only limited by what you can imagine," he said. "Then it's really going to get cool."

Under the integrated program, Internet access will be free to Verizon customers who do not exceed their wireless calling plan's monthly usage allowance and do not exceed 150 hours of Internet usage per month through the dial-up connection; otherwise, extra time used will be charged. To qualify for the plan, customers must buy one of Verizon's tri-mode wireless phones.

After May 31, customers will be notified that they will be charged the normal rates of $6.95 per month for mobile Web access and $19.95 per month for dial-up access.

Still, Verizon's willingness to offer Internet access free for even several months may foreshadow a future trend in the industry, Meade said. "Are they giving us a glimpse of the future, that Internet access will become a commodity?" Meade said. "I hate to admit that Internet access is going to become a commodity, but it might."

Verizon should extend the offer to combat the free wireless Web plans being offered by AT&T Wireless and Sprint PCS, Rickard said. Not only should Verizon consider offering the package to its Internet customers, the carrier may want to extend the time period - or make the offer permanent - instead of ending it on Nov. 30.

That standard may also apply to Verizon's competitors, Meade said.

"I think this will be a cattle prod for the industry," he said. "The big question is: What will be next?"

Choice One Communications turned up its first client in Dayton, Ohio. The company plans to deploy services in three Ohio markets during the fourth quarter of this year; the activation of the Dayton client comes ahead of schedule.

Everest Broadband Networks signed building access contracts in Boston; Dallas and El Paso, Texas; Louisville, Ky.; Nashville; and Norfolk/Virginia Beach, Va. Everest Broadband is under contract to serve more than 575 buildings in 19 major North American markets.

RCN received regulatory approval to construct its Megaband networking in Quakertown and Lower Makefield, Pa. The company secured approvals to bring its services to more than 134,000 homes in the greater Philadelphia area.