BellSouth plans premium DSL service

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 complement 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. By the end of the third quarter, BellSouth had 1.3 million DSL customers. With its new service offerings, BellSouth plans to redouble its marketing efforts in 2004, ending the year with a projected 2.2 million customers and a projected $1 billion in annual DSL revenues, said Bill Smith, BellSouth chief technology officer. 

At an investor presentation at Lehman Brothers today, Smith also hinted that BellSouth might further tier its service, saying BellSouth 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 that the main cause in churn among its DSL customers is cost. The more options it gives its customers, the more likely it will 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 between $40 and $60 a month. The company expects the new pricing structure to generate more revenue because it allows a price-sensitive customer to drop down to a lower-cost service instead of disconnecting and allows a high-end customer to upgrade to more reliable, feature-rich service.

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 the 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 every customer's DSL service, Smith said.