SBC says it will begin testing naked DSL this summer, allowing customers in select areas to buy DSL without also buying phone service.
Earlier this week, SBC's chief financial officer, Rich Lindner, told analysts at an investor conference that he "expects [SBC] will do trials of naked DSL, especially bundled with wireless." The news was first reported by Dave Burstein in his DSL Prime newsletter.
Naked DSL, or DSL that is sold to customers without also requiring them to buy local telephone service, has become a hot topic recently, especially as SBC and fellow Baby Bell Verizon Communications move forward with their planned mergers with the nation's number one and number two long-distance providers, respectively. SBC announced its acquisition of AT&T back in January. Verizon recently won its bid to acquire MCI, beating out Qwest Communications.
The issue of unbundling DSL from local phone service is a factor in the debate over whether or not SBC and Verizon should get regulatory approval for the proposed mergers. Consumer advocates warn that these mergers are bad for consumers because they limit choice. The Bells argue there is plenty of competition from cable operators and other companies offering voice over Internet Protocol (VoIP) services, which route phone calls over the Internet.
But consumer advocates argue that VoIP providers aren't true competitors to the Bells because Verizon and SBC require their customers to buy traditional phone service in addition to their DSL connection. Broadband is needed for a VoIP service to work, so it makes no sense for Verizon DSL customers to subscribe to VoIP services if they are also forced to buy the traditional phone service.
Consumer groups suffered a serious blow on this issue back in March when the Federal Communications Commission ruled that state regulators cannot force the Bells to untie their DSL service from any other service they sell.
Qwest was the first Baby Bell to see the logic in offering naked DSL, which it began marketing to its customers several months ago.
SBC, Verizon and BellSouth have all been reluctant to undress DSL because keeping the services bundled has helped them slow the decline of their traditional local phone businesses. Since the turn of this century the local phone companies have been losing traditional phone-line subscribers, as customers replace their landline phones with cell phones. The Bells have also lost market share to cable companies, which also offer telephony service, and are feeling the heat from third-party VoIP providers, such as Vonage, that are winning new customers.
Now, it looks as though Verizon, SBC and BellSouth are getting the message from their customers. Verizon has taken small steps toward naked DSL. It announced last month that, in certain regions of the country, existing voice customers will be able to drop their landline, so long as they port their phone numbers to some other voice service, such as a cell phone or a VoIP service. But the company still isn't allowing new DSL customers to purchase high-speed broadband without a phone line.
SBC has not yet provided details about its new service.