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AOL teams with SBC for high-speed pipes

America Online has inked an agreement with SBC Communications to provide high-speed digital subscriber line offerings to its members.

America Online has inked an agreement with SBC Communications to provide high-speed digital subscriber line (DSL) offerings to its members.

The announcement is the online giant's latest step toward increasing its broadband commitment, and another validation for DSL technology, which has been criticized for lagging behind the introduction of cable modems in the consumer marketplace.

The DSL service will cost roughly $20 in addition to AOL's $21.95 monthly access fee, according to the company. The service will be introduced this fall for AOL members in California, Texas, Oklahoma, Missouri, Arkansas, Kansas, and Nevada.

SBC Communications is the second Baby Bell to sign on with AOL since the beginning of this year. In January, AOL announced a deal to provide DSL service for customers within Bell Atlantic's coverage area. That service is expected to roll out in the fall.

AOL's broadband play comes amid heightened expectations that rival high speed access providers, such as cable modem access provider @Home, will pose a challenge in attracting subscribers as consumer adoption of broadband access grows.

@Home recently acquired Web portal Excite, giving it millions of registered users, a significant advertising and e-commerce revenue stream, as well as the technology and content to beef up its home page. The Net-over-cable's largest shareholder is AT&T. Observers and analysts have said that this combination could make @Home a formidable competitor for AOL down the road.

AOL has also been embroiled in extensive lobbying efforts with the Federal Communications Commission to open cable lines to independent resellers such as itself and MindSpring Enterprises. Proposed open access laws, still subject to a definitive ruling by the FCC, seek to open all cable networks to competitors in the same way local phone networks are open today.

Static strategy
AOL spokesman Tom Ziemba said the company remains agnostic to its broadband offerings despite its continued push into the DSL market.

"Our strategy remains the same," said AOL spokesman Tom Ziemba. "We are committed to offering members high-speed technology as it becomes affordable to the mass market, and that means DSL, and that might mean cable. We're keeping our options open."

Ziemba also said the roll out of DSL access could spell more high-speed content features for AOL, noting that "all the things that high-speed can offer are options" the company is looking into.

"We'll be able to maximize that advantage with high-speed AOL service," Ziemba said.

Nevertheless, broadband access among consumers remains minimal in comparison to dial-up access. AOL's 16 million members still use standard modems to access the Web, and many analysts say overwhelming broadband penetration will take time. Market research firm Yankee Group estimates that only 4 percent of online households will access the Web through broadband connections by the end of this year. That number is not expected to grow rapidly, with only some 18 percent of homes hooked up to high-speed connections seen by the end of 2003.

Yankee Group senior DSL analyst Michele Pelino said the percentages will only rise when broadband providers can offer content that dial-up consumers cannot get, such as rich audio and video.

"Right now we don't see that much content out there, so many consumer will keep their analog modems until they can see their friends getting broadband content that they can't get," she said. "That's what's going to take broadband a long time to catch up."