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Verizon offers faster DSL plans

The phone giant will raise the upload speed for its basic DSL to 384kbps in a bid to compete more aggressively against cable rivals.

Verizon Communications on Tuesday introduced faster DSL services in a bid to compete more aggressively against its cable rivals.

The phone giant said it will raise the upload speed for its basic DSL (digital subscriber line) plan to 384 kilobits per second (kbps) from its current 128kbps, while maintaining up to 1.5 megabits per second (mbps) for downloads. The plan will still cost $34.95 a month as a standalone service and $29.95 a month when bundled with local and long-distance phone service.

Verizon also said that this summer it will unveil a faster plan that offers 3mbps download and 768kbps upload speeds. Although pricing has not yet been set, the company said it will be "highly competitive."

In addition, DSL customer will get discounts on Verizon's upcoming Net phone services slated to launch this quarter.

The service upgrade comes soon after Verizon reported better-than-expected DSL subscriber additions last quarter. In the quarter ending March 31, the company added 345,000 new DSL customers, representing a 46 percent gain from the year before. Verizon now has 2.7 million DSL customers.

Verizon is not the only Baby Bell to show strong DSL growth. SBC Communications last quarter reported 446,000 new DSL subscribers, its greatest quarter ever, for a total of nearly 4 million.

The Bells, which are the main purveyors of DSL in the United States, have reported strong subscriber gains since many of them began cutting DSL prices a year ago. Last May, Verizon reduced its basic DSL from $59.95 a month to its current price of $34.95. SBC went even lower by offering a one-year promotion for $26.95 a month, marginally more expensive than $23.90 a month for America Online's dial-up service.

These moves were made in an attempt to steal market share away from cable companies, which have dominated the broadband market. In the end of 2003, 63 percent of the 23 million U.S. broadband homes used cable modems, according to a study by Leichtman Research Group.

But the rate at which DSL providers are adding customers has surpassed cable, mainly due to price. Cable companies have maintained monthly rates of about $45 for broadband. Cable companies have responded to the threat by cranking up their basic download speeds to up to 3mbps.