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BellSouth Rolling Out 'DSL Lite'

As cable companies look for ways to hold on to their leading share of the broadband market, telephone companies are slashing prices and offering tiered packages on their rival DSL-based broadband services in order to compete.

BellSouth is the latest telco to join the price-cutting fray with a new "DSL Lite" strategy that also deploys a bundle of service offerings in one package as a way to entice customers to sign on.

The regional baby bell company has rolled out a new lower-priced service for a less speedier DSL Internet service across its nine-state southeast region. If customers purchase local or long distance telephone services from BellSouth, they get the "DSL Lite" for $35 a month. Otherwise, the cost is $39.95 for Internet-only subscribers.

BellSouth is calling its re-branded Internet service "FastAccess DSL Lite," and claims it offers download rates of 256 Kbps (kilobits per second) and upload speeds of 128 Kbps.

While the new "DSL Lite" offers Web surfing speeds of close to five times faster than dial-up Internet service, it also is a fraction of the download and upload rates for its current DSL offerings of 1.5 Mbps (megabits per second) downstream and 256 Kbps for uploading.

BellSouth charges $45 for "Complete Choice," a phone and DSL bundled service, while DSL-only customers pay $49.95.

Some broadband market analysts say that while BellSouth's pricing move is a step in the right direction, the telcos may have to cut prices further to compete with the similarly priced, and often faster cable modem alternative.

The cable companies are moving aggressively on the bundling approach too, offering digital cable television offerings along with high-speed Internet by cable modem services in competitively priced packages.

BellSouth's move is another front in a bubbling price fracas between telcos and cable companies that hit a new pitch recently when Verizon Communications cut its monthly DSL prices in some markets by about $10. The cut is seen as an effort to help Verizon compete against cable companies such as Comcast and AOL Time Warner , whose markets overlap with Verizon's.

By contrast, BellSouth's DSL price cuts were more measured than Verizon's, perhaps in part because it does not operate in as many overlapping markets as other broadband rivals. But Comcast remains BellSouth's largest broadband competitor in the lucrative metro market in and around Atlanta.

Comcast's current high-speed cable modem service costs subscribers $42.95 with their own modem, or $45.95 for those who do not. Comcast's conventional cable service runs at download speeds of close to 1.5 Mbps.

As the broadband market matures, a bifurcation is emerging among providers that are slicing up their connection speeds to offer a higher speed than dial-up, but at a lower cost than regular broadband services, which range in price from $35 to $50 in some markets.

BellSouth's own market research is said to have revealed that a percentage of its 1.1 million current DSL customers would be interested in a lower-priced Internet service, which may likely also meet most of their download and upload demands.

"FastAccess DSL Lite includes the same core functionality as BellSouth FastAccess DSL, only at a slower speed and lower price point," the company said. The DSL Lite features include five e-mail accounts with ten megabytes of email storage, one back-up dial-up account including 20 hours of access and ten megabytes of personal Web space, BellSouth said.

In addition to BellSouth's FastAccess DSL and FastAccess DSL Lite, the company also said it is offering what it is marketing as an even lower cost Internet service. Called BellSouth Internet Service, it features dial-up Internet access and support of the faster V.92 modem standard and is available for $15.95 per month.