June 10, 2002 2:55 PM PDT
Covad announces tiered pricing for DSL
"We strongly believe there is a tipping point that will convince the 50 (million) to 60 million dial-up users to migrate to broadband. And once they get there, no one will go back," Chief Financial Officer Mark Richman announced at a CIBC World Markets' communication conference in New York. "We're within a few weeks of introducing a dial-up replacement product."
Cable companies, which compete with DSL companies to provide high-speed Internet access, have also shifted to tiered-pricing plans, as have a few Canadian DSL companies. DSL companies in the United States, including BellSouth and Sprint, have had variable prices for business-class DSL services.
Richman didn't release any pricing details, but said the company hoped the move would influence federal regulators' pending decision on line sharing.
Cox has been testing tiered pricing in various markets since late 2001. AT&T, Comcast and AOL Time Warner have said they are considering tiered-pricing plans.
The cable companies say the plans give customers a range of options and note that only a small number of people use the most bandwidth. Some low-bandwidth customers like the idea because they don't have to pay as much, but there have been complaints from higher-bandwidth customers that the companies are charging them more to provide less service.
Covad executives said they hoped the move would also help convince federal regulators to allow Covad and other companies to continue to have line-sharing access to the carriers' lines.
In May, the U.S. Court of Appeals for the District of Columbia struck down an FCC ruling that carriers must share lines for high-speed Internet service with competitors such as Covad. The agency is now reviewing what elements the dominant carriers must make available for rivals to offer service.
"Covad has taken a leadership position in lowering the cost of broadband for consumers. The FCC will look at this and see that it is companies like Covad that are leading the charge," Richman said.
Richman said he believed the FCC would rule in favor of continued line sharing: "We don't feel there's merit to arguments against it."
Covad provides DSL access directly to consumers and on a wholesale basis through Internet service providers such as EarthLink and AT&T.