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SBC broadens broadband numbers

The company adds a record number of new DSL subscribers, but analysts say cable's dominance remains undiminished.

SBC Communications may have added a record 446,000 new DSL subscribers over the last three months, but analysts said cable's broadband dominance remains undiminished.

The company announced the record-setting subscriber gains Wednesday, when it reported its quarterly earnings. SBC now claims to have nearly 4 million DSL (digital subscriber line) customers, a number that helped offset first-quarter losses in its core local phone operations.

But despite the DSL subscriber gains, SBC has done little to upset the dominant position cable companies continue to have in selling broadband in the United States. In early March, cable companies served 63 percent of the 26 million U.S. high-speed Internet customers, according to Leichtman Research Group. The split between cable and DSL providers has barely changed over the last few quarters.

SBC garnered new broadband subscribers primarily from a practice known as "bundling," or offering lower-priced DSL subscriptions when purchased with various other SBC services, such as cable TV and local telephone service, company executives said. Like its Bell cousins, SBC first introduced discounted DSL plans that cut monthly fees to as low as $26.95. In February, SBC changed its price plans by requiring people to subscribe to its bundled offerings in return for cheaper DSL access.

SBC for the past year has made an aggressive push to add more DSL users in hopes of offsetting the mounting number of people disconnecting their phone lines. The company said on Wednesday that it lost 305,000 consumer retail access lines in the latest quarter, compared with 424,000 in the fourth quarter.

BellSouth and AT&T are expected to report their own broadband subscriber numbers later this week.

Also on Wednesday, SBC said No. 2 U.S. cell phone service provider Cingular Wireless, which SBC partly owns, will spend $3 billion this year on network improvements, about $353 million less than previously announced.

Clay Owen, a Cingular spokesman, said the company's $41 billion planned purchase of AT&T Wireless will make unnecessary about $353 million worth of network upgrades Cingular was planning this year. The deal, which has several regulatory hurdles to clear, isn't expected to close until the end of 2004.