Pac Bell enters fast Net market

Pacific Bell is quietly laying plans to launch high-speed Internet access over phone lines, known as xDSL, in the San Francisco Bay Area in September, invading the turf of access provider @Home just after that firm's highly successful initial public offering, executives told CNET's NEWS.COM today.

The rollout, among the first by a Baby Bell, sets the stage for a cutthroat battle between telephone carriers and cable companies to provide fast Net access. @Home's IPO has created euphoria among some investors, but Pac Bell's plans are a sober reminder of the competition that lies ahead.

Pac Bell plans to launch digital subscriber line service in the East Bay and San Jose, California, areas at prices ranging from $75 to $150 per month, according to Mike Powell, marketing manager of the telco's xDSL team. "In the near term, there will be overlap" with @Home's customer base, he said.

Powell added: "It looks like Pac Bell will be the first [of the regional Bell operating companies] to bring a product to market." Other Baby Bells, including Ameritech and Bell Atlantic, have been testing xDSL, along with Pac Bell.

Since September, Bell Atlantic has been holding an xDSL market trial in northern Virginia with about 250 customers, charging them $60 a month. Users download data at 1.5 mbps and send at 64 kbps under that trial. In May, the company said it plans to begin offering a commercial ADSL service for consumers in mid-1998.

Pac Bell has been testing xDSL in the Bay Area for about a year. Powell dubs the next rollout a "market trial," meaning that it will be offered only in limited geographical areas. A full-scale rollout will come later, pending approval from California regulators.

Consumers will be offered two plans. One lets them send and receive data at 384 kbps, while the other lets them send data at 384 kbps and receive it at 1.5 mbps. That allows for faster delivery of graphics and multimedia files, for example. The latter service will cost more than $150, but pricing hasn't been determined, Powell said.

Pacific Bell Internet Services will offer the service, and Pac Bell is negotiating with other ISPs as well, according to Powell. Besides an ISP, customers will need an xDSL modem and a "splitter." The equipment will cost between $350 and $500, he added.

The plan illustrates the clout of the seven regional Baby Bells in proving high-speed Net access. It is likely to put pressure on other ISPs as well.

The Baby Bells have another potential weapon at their disposal. Last May, SBC, Pacific Bell, and BellSouth announced a plan to jointly buy long distance services as a way to maximize their ability to secure the best possible wholesale interexchange rates.

The same so-called buyer's club could be used to create national cooperative and "roaming" agreements for Net access nationally. For example, a high-speed Net access customer of Pacific Bell could hook into an SBC line when he or she is in Dallas on a business trip.

The Bells have substantial hurdles to overcome, though. For starters, xDSL is slower than the typical high-speed Net access over cable. Those systems offer speeds of up to 10 mbps--nearly seven times faster than the 1.5 mbps speeds Pac Bell is planning. But in reality, those speeds are up to 4 mbps because of limitations in users' PCs. ISDN is slower than both at up to 128 kbps.

Cable modem Net access also is cheaper--typically $35 to $55 per month. It also has a business service called @Work.

In addition, the Bells have been roundly criticized for their efforts at marketing ISDN. The California Public Utilities Commission has chided Pac Bell for delays in installation. The company counters that its record is improving.

When it comes to speed comparisons, Pac Bell's Powell says that xDSL's speed remains constant because it is dedicated bandwidth. By contrast, the Net access via cable is a shared system, so speed may not be constant if too many users are on the system. The system is scalable, however, so it could be upgraded to handle more users.

An @Home spokesman couldn't comment on Pac Bell's move, saying the company still is in a "quiet period" from its IPO. But the company's prospectus says that the @Home Network can deliver xDSL if needed. In addition, @Home has struck an alliance with Teleport Communications Group to provide high-speed Net access over phone lines.