EarthLink to offer free DSL installation
The Internet service provider is set to announce plans to waive all setup costs for high-speed Net access in order to boost its broadband customer base, according to executives.
As earlier reported, the company, which charges $49.95 per month for high-speed digital subscriber line (DSL) connections to the Net, will renounce its up-front equipment and installation costs nationwide.
Customers are expected to save roughly $300 as a result of the offer, according to the company.
Analysts believe use of DSL will grow rapidly in the next several years, perhaps outpacing the adoption of competing cable modems, according to some studies. Investment bank U.S. Bancorp Piper Jaffray estimates there will be 12.9 million DSL lines in the United States by 2002.
The move is intended to rapidly increase the number of customers using EarthLink's DSL services--an offering with higher profit margins for the company.
It also represents the continuation of a low-cost trend in the high-speed, or "broadband," Net access market. DSL prices have fallen to the $50-a-month range during the past year, with several companies offering promotions such as no-fee installation or other discounts.
SBC Communications, for example, is offering DSL for $39.95 per month with no setup or modem costs until Sunday.
"The high up-front costs definitely are a barrier to entry. Anything that broadband service providers can do to ease that pain certainly will help their take rates," said Michael Harris, president of Kinetic Strategies, a broadband market research firm. "SBC certainly proved that last quarter."
Prior to SBC's promotion the company was installing an average of 1,100 DSL lines per day, but it now installs service for roughly 3,000 new customers daily, Harris said, citing statistics from a recent SBC analyst briefing.
But until prices fall, many consumers, particularly newer and non-Internet users, may be reluctant to pay high monthly premiums for faster Net access. As such, providers increasingly are willing to waive up-front fees in favor of long-term contract commitments.
"They don't want to pay a bunch of money up front," said Mike Lunsford, executive vice president of broadband services at EarthLink.
The company expects to see customer orders increase by as much as 50 percent after waiving the setup costs, Lunsford said.
EarthLink, which has about 3.5 million dial-up Net customers, recently topped 50,000 broadband subscribers. The company currently offers DSL service in 30 markets--reaching roughly 9 million homes--and plans to service at least 40 markets by the end of the second quarter.
Lunsford said he is "confident" EarthLink will reach 150,000 broadband customers by the end of the year.
Executives expect about 80 percent of their high-speed customers to use DSL in the future, Lunsford said.