Verizon Communications said yesterday that it would begin using Microsoft's content, software and marketing support for its high- speed D.S.L. Internet service and would pay Microsoft a portion of the revenue. þþAs for Microsoft, it said yesterday that it now offered a D.S.L. version of its MSN online service in 70 markets nationwide, representing 90 percent of the households that can get D.S.L. service. Until yesterday, MSN was available in only 33 markets, primarily in the Western states served by the local phone unit of Qwest Communications. Now, MSN is buying wholesale D.S.L. access from BellSouth, SBC Communications and Verizon and reselling them with MSN content and software.þþMSN's earlier efforts to expand its D.S.L. service nationwide have been star crossed. It first contracted with Northpoint Communications to provide its nationwide backbone network. When Northpoint filed for bankruptcy protection, Microsoft hired Enron, which met the same fate. Now Qwest is providing Microsoft's backbone.þþVerizon customers who sign up directly with MSN for D.S.L. service under the current wholesale agreement will be encouraged to convert to the new service, called Verizon Online With MSN, when it begins this fall. þþVerizon is the largest local phone company, but it has trailed SBC, the No. 2 company, in the deployment of digital subscriber line, or D.S.L., service. Verizon has 1.4 million D.S.L. subscribers and SBC has 1.5 million. Microsoft said it had 500,000 to 770,000 D.S.L. customers, most of them in the Qwest service area.þþThe phone companies, however, have been trailing the cable television industry, which offers a rival method for high-speed Internet services that many customers find faster and easier to install. Thus the phone companies have been looking for ways to increase the appeal of their D.S.L. offerings. þþLast fall, SBC agreed to replace its D.S.L. and its Prodigy online service with a new service created with Yahoo, the big Internet portal. Verizon's deal with Microsoft is similar to the SBC-Yahoo arrangement in that Microsoft's MSN portal will now provide Verizon subscribers with MSN services like e-mail, instant messaging and access to information and entertainment. þþAs with those in the Yahoo deal, most of these services are available free to any Web user, but the companies believe that claiming they are integrated with the D.S.L. offering creates a marketing advantage.þþMost important, they hope to make their offerings complete enough to lure subscribers from America Online, by far the largest provider of Internet access over dial-up modems. (AOL's own high- speed offering, over both cable and D.S.L., has been a disappointment for AOL in the marketplace.)þþMSN will also promote the jointly branded D.S.L. service to existing dial-up MSN customers in the Verizon service areas and through its relationships with electronics retailers. Customers signed up by MSN would receive customer service from Microsoft and pay by credit card. Customers signed up by Verizon would have the service fee added to their phone bills and receive service from Verizon. Each company would be free to charge a different price for the service; both now charge about $50 a month for D.S.L. þþThe companies said they would split revenue from the service, but they declined to discuss the details.þþVerizon's choice of MSN represents a substantial setback for Yahoo, which has said it wants to make D.S.L. deals with other local phone companies to reach customers in the 36 states not served by SBC.þþJim Grant, a senior vice president of Yahoo, said the company ÿremains committed to a national broadband footprint,ÿ and will explore deals with other D.S.L. and cable companies.þþBoth Yahoo and MSN are looking for ways to create extras for customers who subscribe to their high-speed internet service that are not available to any users of their Web sites. Yahoo says its D.S.L. service will offer more features that can be modified to reflect each user's personal interests, and it will include some premium services that cost Web customers more. þþMSN is planning to release a new version of its software this fall, which it says will offer improvements in areas like e-mail and parental control of children's surfing. Unlike MSN's current software, the new version will not be available free over the Internet.þþFor Verizon, the deal represents the end of a long and unsuccessful effort to profit by selling movies and other content over its telephone lines. þþÿThis deal is Verizon saying, `We are a phone company, not a content company,' ÿ said Dave Burstein, the editor of DSL Prime, an industry newsletter.þ
Source: NY Times
