Game On For Broadband MSN (Again)

The Microsoft Network is officially in
the nationwide digital subscriber line (DSL) business (again) with a
high-speed Internet offering initially covering roughly 60 percent of
DSL-capable homes in the U.S., officials announced Monday.

It’s MSN’s initial move to compete against AOL Time Warner’s
vast cable Internet empire for the hearts and minds of dial up Internet
users throughout the U.S. Many of these dial up users (more than 33
million users, if you combine AOL and MSN numbers alone) will move within
the next several years to a broadband platform, and the number one and two
Internet service providers (ISPs) want to be there to capture them.

In typical corporate one-upsmanship, Steve Ballmer, Microsoft Corp.
chief executive officer and Yusuf Mehdi, MSN vice president, also launched
MSN 7 Monday, which features enhanced services like .net alerts and 30
percent faster Web site navigation, one day before rival AOL’s launch of
AOL 7.0.

The second-largest Internet service provider (ISP) in the nation makes no
bones about its distant ranking behind AOL in the dial up Internet
business, but says the broadband market makes for a level playing field.

To counter AOL’s dominance in the content department, with its vast Time
Warner magazine, cable TV and movie holdings, Ballmer & Co. have been
developing partnerships with other media companies. These partnerships,
Ballmer said, will provide for more equal footing when trying to compete
for consumer attention.

“We’re able to level a little competitive heat with AOL Time Warner with
some of the partnerships we’ve made,” Ballmer said. “You’ve seen us move
aggressively on starting forming relationships with all the rest of the
media, like NBC, Vivendi and Sony. So, in a sense, in our flagship, we’re
carrying not only our own work but an ecosystem of work starting with the
media companies and with our enterprise customers.”

Countering AOL and its services is MSN’s latest version of its popular
portal and customer-friendly options. According to officials, MSN 7 boosts
performance enhancements (up to 30 percent) that customization won’t bog
down to its redesigned home page.

With MSN 7, Ballmer said MSN now has the service to match it the high-speed
Internet offering is now provides.

“We really have, with MSN 7, a great broadband offer to put in front of the
consumer,” Ballmer said. “I think that virtually every Internet access
subscriber in the U.S., not only our own but those of our competition, will
become up for grabs as people move from narrowband to broadband, and
certainly the market dynamics are quite different between broadband
subscribers and narrowband subscribers and we want to make sure that we
have a really exciting offer.”

AOL made the first successful move when it completed the acquisition of
Time Warner earlier this year. MSN, which decided not to get into the
acquisition game itself, has been furiously brokering deals behind the
scenes with media and telecommunication
to bridge the gap.

MSN’s DSL coverage footprint will jump to 90 percent in roughly three
months, as it completes and launches high-speed Internet provisioning
through incumbent local exchange carriers (ILECs) Verizon Communications ,
SBC Communications , and
BellSouth Communications.

MSN has been offering a co-branded Qwest
DSL service since August, although
officials wouldn’t comment on the initial success of the program.

The service will cost subscribers “under $50, unlike many high-speed
offerings that cost well over that amount,” Medhi said. When pressed, he
conceded the MSN product would cost $49.95 with two months free service, a
free DSL modem and free activation. MSN also provides a self-install disk
(or virtual truck) to get started.

This is MSN’s second foray into the lucrative, yet exceedingly dangerous
industry of high-speed Internet services.

Last year, the ISP offered DSL through data competitive local exchange
carrier (DLEC) NorthPoint Communications and managed to garner more than
7,000 customers. Unfortunately for MSN, NorthPoint went out of business,
shutting down their network with no notice.

The deal prompted the software giant to shun
companies that don’t actually own the network, as in the case of
now-defunct NorthPoint and other DLECs like Covad Communications and
Rhythms NetConnections. Officials quickly penned a juicy deal with Qwest
and entered talks with the other ILECs to provide nationwide coverage.

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