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BellSouth portal seeks to slash Net fees

The Baby Bell will roll out a new Web site today that it hopes will signal the first step toward subsidizing Internet access fees with Web advertising and commerce revenue.

BellSouth will roll out a new Web site today that it hopes will signal the first step toward subsidizing Internet access fees with Web advertising and commerce revenue.

Called BellSouth Buzz, the site takes on the Web portal model of aggregating content and Web services with a commerce focus. But with a heavy local focus, the site also marks a renewed attempt to bring the company's print advertising partners onto the Web.

The new site also could help fend off other major local Web guides, such as Microsoft's MSN Sidewalk, America Online's Digital City, and CitySearch, which are aggressively seeking local advertising dollars.

If the site proves financially successful, it could be BellSouth's first significant step toward using new revenue streams to drive down Internet access fees, according to Donna Lachance, vice president of the company's advanced data services unit.

"It is certainly our hope that the Internet would develop along models that advertising and commerce revenues would pay for the cost of the access," Lachance said. "This local portal, which is focused right on an area that is under-served, is an attempt to begin to capitalize on that."

Ultimately, Lachance said she hopes the local service and other alternative revenue streams will generate enough profit to drive access fees down to zero--but this is a long-term goal, she stressed.

The new portal comes as telcos and traditional Web companies have begun jockeying anew for users' eyeballs.

With few exceptions, telephone companies have been unsuccessful at matching the subscriber growth of pure ISPs like EarthLink or MindSpring. The Bell companies' start-up content pages have meanwhile gone almost unnoticed outside their own subscriber base.

But AT&T's recent moves toward a more substantial Web presence, by acquiring control of cable Net access company @Home and the Excite Web navigation system, have helped rekindle telco interest in providing content front-ends for their services.

Analysts say that while BellSouth has been slow to build a competitive Web offering, the service is sitting on a potential gold mine, given its close relationship with the local market through its Yellow Pages phone directory.

"When you talk about the local commerce space, there's really essentially three players: the local newspaper, the Web start-up, and then there's the local directories," said Forrester Research analyst Chris Charron. "Each has an opportunity to be an intermediary for local commerce."

Thus far, the nationally branded local sites have seen lukewarm advertising revenue at best. If Baby Bells such as BellSouth can create a more compelling local commerce guide, it could likely pluck advertisers away from the more established Web brands, Charron added.

But it is an open question whether BellSouth can successfully turn its offline brand into Web dollars, analysts said.

"It will be expensive trying to build traffic and spending for offline promotion," said Charron. "That local space is still being flushed out, and it's not as mature as the portal space."

The Buzz Web site will be initially cover 62 cities in BellSouth's region, but will be available to all BellSouth.Net subscribers and other Web surfers.

BellSouth.net currently has about 450,000 subscribers.