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SBC to offer faster AOL
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March 11, 1999: 6:29 p.m. ET
Agreement on DSL lines will enable users to get online 50 times faster
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NEW YORK (CNNfn) - America Online and SBC Communications said Thursday they have teamed up to provide high-speed Internet access on the West Coast, a move that also is intended to fight off competition from cable operators who provide their own quick connection services.
Under the deal, about 8.4 million customers of some SBC Communications phone companies in California and the Southwest will be able to get fast access to America Online by year's end. AOL (AOL) subscribers in areas where SBC (SBC) will provide digital subscriber lines, or DSL, can upgrade their online service for an additional $20 a month.
The technology will allow them to connect to the Internet at 1.5 million bits per second, more than 50 times faster than current 28,800 bps connections. The companies said AOL customers also won't have to dial up every time they want to log in, since DSL users are always connected. And AOL subscribers can be online and use their telephone or fax at the same time.
"It can be implemented incrementally, affordably, and at very attractive prices," said Dave Gallemore, SBC's executive vice president for strategic marketing. "So we think it's going to emerge as a very attractive alternative to millions and millions of customers."
However, some Internet experts foresee some problems with the DSL technology, at least initially.
"There's installation headaches, and you're getting the phone guy to fix your computer -- it's all a cumbersome process," said Abhi Chaki, access strategies director at Jupiter Communications. "So we really see a lot of hurdles before the service is ready for a mass market."
SBC says the enhanced service will be available to customers in California, Texas, Missouri, Oklahoma, Arkansas, Kansas and Nevada by the end of 1999.
AOL reached a similar agreement earlier this year with Bell Atlantic (BEL) for customers on the East Coast. The online service and local phone companies have a common rival in cable companies, which also are offering high-speed Internet hookups.
"I think we're going to see some more deals of this sort in future months, as AOL expands its presence in the broadband market," said Mark Cavallone, an Internet analyst at S&P Equity Group.
AOL also is lobbying the government to force cable companies to open up their broadband networks to online services. But the Federal Communications Commission already has rejected one such petition.
AOL stock closed Thursday at 95-13/16, up 3. SBC closed up 1 5/8 at 53 5/16.
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