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Broadband Broadens Its Pitch

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ISP Guide The Need for Speed: Personal technology columnist Rob Pegoraro offers tips on how to shop for the right Internet service provider.
Feature Story: Broadband Broadens Its Pitch

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Providers are also jiggling their price structures to see if slower but cheaper broadband will draw new users in.

Covad Communications Corp., a Santa Clara, Calif., telecommunications firm that supplies the DSL circuits used by EarthLink and other Internet providers -- and sells service under its own name -- is one of the first companies to offer "tiered" service. That is, customers can choose to pay more for faster access or less for slower access.

Covad figured that it could advertise a cheaper plan as costing the same as a dial-up Internet subscription plus an extra phone line. That plan, at $39.95 per month, still offers download speeds about seven times as fast as you could get with a dial-up subscription, but half those of other forms of broadband.

The company now offers a $49.95 plan and, for high-end users, a $69.95 option; EarthLink plans to roll out a similar sort of price structure this year.

But don't pick up that phone yet -- there's more. If broadband providers can't close the deal with consumers on the strength of an attractive price alone, an increasingly popular strategy is to fold Internet access into a package with other communications services. Starpower Communications Corp., for example, gives customers a discount of a few dollars a month if they order an all-in-one bundle of the company's cable TV, broadband and phone services.

Verizon now offers a package it calls Verizon Veriations, in which customers sign up for local, long-distance and wireless phone service as well as DSL Internet. Verizon DSL will run you $49.95 per month by itself, but get the service as part of Verizon's bundle and it's $34.95.

Broadband companies like this type of deal because a consumer who has signed up for multiple services makes them more money -- and is more likely to stick around. For those consumers, meanwhile, it means one or two fewer bills a month.

Before they place all or most of their telecom existence in the hands of one company, however, customers also need to be able to count on that firm sticking around. Many broadband Internet providers have not: Those optimistic and patient early adopters have had to put up with a lot of volatility in the business over the past few years. Several high-profile bankruptcies -- Excite At Home Corp. on the cable side and NorthPoint Communications Inc. and Rhythms Net Connections Inc. in the DSL market -- have left customers stranded, sometimes without any broadband option at all.

Charles E. Hoffman, president and chief executive at Covad, observed: "We've gotten quite good at migrating customers from ISPs that failed. We've done quite a lot of that over the last few years."

On the shrinking list of broadband providers, the surviving players are mostly phone and cable companies. Consumers lost another major alternative recently when DirecTV announced in December that it was pulling the plug on its DSL service.

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