Verizon to Offer Wireless Web Link Via Pay Phones- Firm Heating Up Competition With Cable

Verizon Communications Inc. plans to announce next week that it will equip some of its more than 300,000 public telephones with the ability to offer wireless access to the Internet, part of its ongoing effort to build up its position as a major Internet provider.

By Christopher Stern
Washington Post Staff Writer

The move is the latest of several by Verizon this year as it attempts to compete more aggressively with the cable industry’s high-speed data services. Verizon recently decided to move forward with plans to cut its monthly rates for high-speed Internet service by as much as 40 percent.

Verizon officials declined to comment on their wireless Internet strategy yesterday, or to say how much the new service would cost. Vice Chairman Lawrence T. Babbio Jr. discussed the plans generally at an industry conference in New York.

Sources familiar with Verizon’s efforts said the wireless Internet connections, commonly known as WiFi, or wireless fidelity, hotspots, will be added to public telephones in high-traffic areas such as hotel lobbies and airports. The technology allows anyone with a computer equipped with a special antenna to connect to the Internet within the general vicinity of the hotspot, usually about 150 feet.

"This tells me that they are finally getting up to speed with all the technological developments swirling around Verizon." said Cynthia Brumfield, president of Broadband Intelligence Inc., a Bethesda-based Internet research firm.

Verizon said this year that it will expand the reach of its high-speed digital subscriber line (DSL) service. By the end of the year, Verizon is planning to make DSL service available to 24 million homes, up from the 19 million it can now serve.

Verizon has 1.3 million DSL customers, far behind several cable companies, including Comcast Corp, which has 4 million broadband customers, and Time Warner Cable, which has 2.7 million subscribers. There are about 17 million high-speed Internet subscribers in the United States, about two-thirds of whom are cable subscribers.

So far, the cable industry has shrugged off Verizon’s announcements, saying they have no plans to adjust their efforts to market Internet service.

Under Verizon’s new pricing plan, monthly fees for Internet service will drop from about $50 to $29.95 for customers who also subscribe to local and long-distance telephone service. On a stand-alone basis, the monthly fee will be about $34.95. In contrast, most cable customers pay about $42 per month for Internet service.

During an interview this week, Comcast chief executive Brian L. Roberts said his customers have chosen cable over DSL because of better service and higher speeds, not necessarily lower prices. "I think the consumer has figured out that cable is better than DSL," Roberts said.

Several analysts said this week that there is plenty of room for both DSL and cable to grow before competitive pressures begin to affect pricing. Just 17 percent of U.S. homes subscribe to high-speed Internet service.

"We don’t think there is going to be a price war," said Niraj A. Gupta, an analyst with Salomon Smith Barney.

Roberts suggested he would compete by enhancing service rather than cutting prices. Comcast is considering several options, such as boosting current access speeds and adding online content.

Verizon, meanwhile, is planning to boost its online look and feel through its partnership with MSN, which is now Verizon’s Internet portal of choice for DSL customers. MSN is owned by Microsoft Corp. and competes directly with America Online, the nation’s largest Internet service provider.

http://www.washingtonpost.com/wp-dyn/articles/A36721-2003May9.html