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DIRECTV Unwraps DSL Service

Coming soon to a retail outfit near you: digital subscriber line (DSL) Internet service from a satellite TV company.

DIRECTV Broadband Inc., a subsidiary of Hughes Electronics Corp., announced Wednesday it has penned an agreement with Circuit City to market DIRECTV DSL at $49.99 a month.

Hoping to lure customers away from the competition, the company is selling its DSL service for $19.99 a month for the first three months and waiving the activation fee. Unlike most DSL outfits and similar to what cable Internet service providers (ISPs) provide, the new company isn't holding customers to an annual contract, either.

With it, DIRECTV Broadband customers get asymmetrical DSL (ADSL) download speeds up to 1.5Mbps (with up to 128Kbps upload speeds), a static IP address, five email accounts and 10MB of Webmail space, 60 minutes of free remote dial-in access a month, and 10MB of server space for a Web site.

The announcement, the result of an April buyout of troubled DSL provider Telocity by Hughes, is the second one this month by the electronics. Earlier this month, Hughes announced the launch of its two-way satellite Internet service later this year, dubbed DIRECWAY, at $59 a month.

Ned Hayes, DIRECTV Broadband president and chief executive officer, said the Circuit City deal is a continuation of an agreement the companies have always maintained.

"We are able to leverage DIRECTV's strong historical partnership with Circuit City to build loyal relationships with our subscribers, offering more choices of how and where they would like to order our service," Hayes said. "As we work in partnership with DIRECTV to offer consumers a bundled whole-house entertainment and information solution, it will be critical to have a strong national retail strategy and partnership in place."

The addition of DSL to the DIRECTV lineup gives Hughes a two-pronged entry into the highly-competitive broadband Internet arena, a sector that has seen numerous incidences of pricing wars between the many providers looking to meet the increasing demand for high-speed Internet services.

But with the many failing DSL providers, a pricing point comparable to cable Internet service and an established base of 10 million satellite TV subscribers through its sister subsidiary DIRECTV, officials feel they have a good chance of succeeding.

It's too early to tell how much of the former Telocity remains now that it is a small cog in the huge corporation that is Hughes, a subsidiary of General Motors Corp. that saw revenues of $3.88 billion in 2000. Telocity, before its buyout by Hughes, saw only $9.4 million in revenues that same year.

But where Telocity lacked in financial standing, it made up in customer loyalty. With more than 47,000 subscribers, many refugees from other failing DSL providers, the broadband ISP quickly gained a reputation as a consumer-friendly company.

While other ISPs, many unable or unwilling to do anything about the many provisioning, billing and service guarantees promised, Telocity took steps to ensure they kept their customers, like offering a free month of DSL service if connectivity was lost.

Many of Telocity's senior management escaped the axe when they were bought out by Hughes in April. Hayes moved up from his position as Telocity chief financial officer into the CEO seat, while Telocity co-founders Kevin Grundy and matt Sepovich kept their senior vice president positions at the new company.

Wednesday's deal with Circuit City is part of DIRECTV Broadband's retail program, which gives stores a commission for every DSL lead sent that results in a sale. Officials from both companies wouldn't divulge the commission rate.



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