RealTime IT News

Microsoft, Verizon Ink Deal for Co-branded DSL

In a deal that will catapult MSN into a leading role in the broadband arena, Microsoft Corp. forged a strategic alliance with Verizon Communications to roll out a co-branded DSL service beginning early next year.

When it is unrolled, the "Verizon Online with MSN" service will be available to all Verizon Online DSL customers and MSN Broadband Internet Access customers located in Verizon's network. Verizon's network footprint covers about 34 million homes.

"The key goal for both of our companies is to put a service in the marketplace to make it easy for people to sign up for broadband," said Microsoft CEO Steve Ballmer. "Everybody can talk about the unrealized potential of broadband. I think there's 40 percent of households who don't have broadband but should."

Customers can sign up for the service with either Verizon or Microsoft, with either company handling the billing and service. The companies did not set a price for the service. Financial terms of the deal and its duration were not disclosed, but Ballmer said it was a "long-term" agreement.

"We have put ourselves in the position to really deliver on the promise of this digitized world by having a partner like Microsoft," said Verizon CEO Ivan Seidenberg.

Verizon, the largest U.S. phone company, currently has 1.4 million DSL customers, while MSN has 7.7 million dial-up customers. Microsoft said the alliance, along with a five-year pact it struck with Qwest Communications in April 2001, gives it the ability to serve half of the DSL market in the U.S.

According to a recent study by research group TeleChoice, the United States had 4.8 million DSL customers at the end of the first quarter, growing 12 percent from the previous quarter.

With this deal giving Microsoft access to about a third of the nation's potential broadband customers, Ballmer said it would continue to ally with cable companies and other high-speed Internet access providers.

"There's still two-thirds of the U.S. we have to figure out to serve in a great way," he said.

The deal will deepen Microsoft's relationship with Verizon. Microsoft and Verizon Wireless signed a deal last month to jointly develop and market wireless data services with the "VZW with MSN" service. Since its launch, Microsoft said VZW with MSN has attracted 300,000 subscribers.