Rivals Begin Siphoning off DirecTV DSL Customers

The clock is ticking for DirecTV DSL customers as rival Internet service providers circle the waters hoping to pick up customers.

Verizon is the latest provider to show up with a helping hand. The New York-based communications giant Monday said it would help transition more than 27,000 DirecTV DSL customers served by Verizon DSL to Verizon DSL service in Verizon local telephone operating areas. Cupertino, Calif.-based DirecTV Broadband currently serves approximately 160,000 customers nationwide.

Earlier this month, El Segundo, Calif.-based Hughes Electronics said it would close DirecTV Broadband – its high-speed Internet service business – in approximately 90 days.

Under terms of the arrangement, DirecTV Broadband will recommend to its customers in Verizon regions that they subscribe to Verizon Online DSL and will assist them in contacting Verizon Online to order DSL service. The deal allows for special pricing of Verizon Online DSL for $39.95 a month with a one-year contract or $29.95 for the first three months and $49.95 per month thereafter. Verizon said the offer expires February 28, 2003.

“These customers now have an option for continued access to high-speed Internet services without having to search for a new provider. Our objective is to have a smooth movement of customers to Verizon Online DSL without significant downtime or disconnection,” DirecTV Broadband president and CEO Ned Hayes said in a statement.

The agreement with Verizon mirrors a similar announcement with SBC to transition 70,000 customers in Texas and 12 other states. Approximately 54,000 DirecTV Broadband customers are in BellSouth DSL’s territory in the Southeast.

In addition to providers sanctioned by DirecTV Broadband, several other providers have targeted customers who will lose their service.

Hughes acquired DirecTV Broadband in April 2001, and as recently as October was looking to jump-start the business with new features and an advertising campaign.

But despite adding subscribers, the customer base never reached the critical mass necessary to turn a profit. The company faced stiff competition from its DSL rivals, as well as companies offering alternative high-speed hookups, most notably, cable modems.

And after its merger with EchoStar collapsed, Hughes needed to quickly to stem the flow of red ink. Associated with the move, 200 workers were laid off from DirecTV Broadband earlier this month, and another 200 will go when the wind down is complete.

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