December 4, 2003 10:56 AM PST

SBC Yahoo DSL expands retail presence

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SBC Communications and Yahoo plan to promote their broadband service in more retail stores, as part of an ongoing effort to boost subscriber growth.

The companies said Thursday that they will set up kiosks displaying their SBC Yahoo service in 2,000 locations throughout RadioShack, OfficeMax, Staples, Sam's Club and Gateway stores, among others. SBC and Yahoo already promote their service in more than 200 BestBuy and Cingular stores.

Besides being offered through retail, SBC Yahoo is also available in other channels, such as existing bundles through PC manufacturers Dell, Gateway and Hewlett-Packard. An SBC representative said the retail deals are indefinite.

The promotion underscores SBC and Yahoo's ongoing push to sign up new customers for their digital subscriber line (DSL) service. Since the companies launched SBC Yahoo DSL in September 2002, the service has shown solid growth. Last quarter, SBC said it added 365,000 new DSL subscribers, the most out of any Baby Bell, for a total of 3.1 million customers.

Yahoo gains from the success of the DSL venture, because it counts all new subscribers as paid customers. SBC shares subscription revenue with Yahoo for all customers of the co-branded service. Yahoo provides a customized Web browser and shares advertising revenue generated on the site.

Much of the service's growth stems from continued price cuts, which are part of SBC's push to add new DSL customers. In September, SBC and Yahoo began offering DSL for $26.95 a month for one year.

Other Baby Bells, including Verizon Communications, BellSouth and Qwest Communications International, also have reduced their prices in an effort to compete against cable companies. Cable broadband services currently dominate the overall mix of U.S. broadband households, with a nearly 2-to-1 lead in market share against DSL.

Cable companies have responded to the price cuts by boosting their download speeds, but they have mixed feelings about reducing prices.


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