To the neighborhoods!

Two Bell companies are attaching more muscle and lower prices to their respective digital subscriber line efforts in attempts to stave off the encroachment of cable modem operators on residential markets.

SBC Communications announced last week that it is expanding its asymmetrical DSL rollout in the Pacific Bell region to include 255 DSL-equipped central offices, covering 70% of California customers. In addition, Bell Atlantic announced a partnership with America Online under which AOL plans to offer Bell Atlantic's Infospeed DSL access as a premium in Bell Atlantic markets, with prices expected to be only $20 extra per month.

Both moves are clearly intended to heighten the appeal of the telcos' high-speed data formats to residential customers. The SBC offering in particular is priced to draw residential users (see figure).

SBC also announced plans to roll out ADSL in Southwestern Bell's five-state region by the end of the year and will start a trial in Southern New England Telecommunications' territory Jan. 21.

Fueling SBC's drive in California is the advancement of cable modem deployment, said Dave Gallemore, executive vice president of strategic marketing at SBC. "Our immediate emphasis on California reflects the state's appetite for data services," he said. "The myth that's been at work is that in terms of availability the cable modem people are ahead of the game, and we don't think that's true."

One analyst said the Bell companies' moves-and particularly the prices-likely will cement DSL's reputation as a residential high-speed data option.

"Consumers tend to prefer an [Internet service provider] or a local phone company for their high-speed access," said Dave Eiswert, a consultant at The Strategis Group. "People associate the Internet with ISPs and with the telephone, and they tend to hate their cable companies."

AOL's endorsement could go a long way in helping push DSL to the masses, another observer noted. "The industry needs someone like AOL to get behind DSL for it to be appealing to Joe Web Surfer," said Claudia Bacco, senior DSL analyst at TeleChoice.

These somewhat unexpected signs of DSL's advance also should serve as a warning to cable modem service providers that may have been getting too comfortable in their neighborhood reign, Eiswert said. "The cable industry has been under the impression that DSL isn't a residential competitor, and I think they were right because of the way DSL has been priced," he said. "DSL is making a residential charge earlier than they expected it would."