AT&T DSL Takes on Verizon

AT&T , which sold its cable broadband subsidiary to Comcast for $29 billion in December, is back in the residential high-speed Internet game, this time through a partner.

The Morristown, N.J., telecom carrier said it is offering digital subscriber line service through Covad Communications’ national network.

Available in New York now, and additional states by year’s end, DSL is sold as part of an AT&T bundle that include local and long-distance phone service. Eventually, the service is expected to be in all 13 states that AT&T sells local and long-distance.

“Customers in New York can now take advantage of our award-winning, high-quality local and long distance phone services and enjoy zipping around the Internet to download music in seconds or watch video clips,” AT&T executive Kevin Crull said in a statement.

AT&T’s market re-entry is accompanied by promotional offers. Standard DSL service costs $19.95 a month for the first three months and $39.95 a month thereafter. The premium DSL plan (which AT&T says is faster) runs $29.95 a month for the first three months and $49.95 a month after that. Both include a free installation kit and tech support.

Bundling of phone and high-speed Internet services is seen by nearly all major providers as essential to winning new subscribers and keeping existing ones. Customers like the plans because they can pay for all the services on a single bill and have a single point of contact for tech issues.

SBC Communications , which serves 13 states in the Midwest and West, has led the bundling charge and recently upped the ante by teaming with EchoStar to add satellite TV to its offerings.

Other active players include Verizon, which was first to provide its customers with free Wi-Fi access as part of their service. In fact, AT&T’s New York push pits it against Verizon, which is strong in the Empire State and has its own voice and data packages.

A Verizon spokeswoman was not immediately available for comment.

Joseph Laszlo, a senior analyst with Jupiter Research (owned by the same parent company as this Web site), said AT&T isn’t too late to introduce DSL, but said changes might have to take place for it to be a serious threat to Verizon.

Pricing is chief among them. The DSL service is available to AT&T’s local and long-distance customers, but at prices that match other carriers’ standard, non-bundle prices, Laszlo said.

“While AT&T’s existing voice customers may gain simplicity by going with their voice provider for broadband data, consumers who are only now evaluating their voice (and) data options will expect and demand more favorable pricing than AT&T has placed on the table,” Laszlo said.

For Santa Clara, Calif.-based Covad, the deal adds another high-profile customer. The DSL wholesaler already provides service to SBC, EarthLink, DSL.net and XO Communications. Financial terms of the pact between AT&T and Covad were not disclosed.