Verizon Debuts MSN 8 DSL Bundle

Microsoft’s MSN Internet service announced on Tuesday an agreement with Verizon to bundle MSN 8 with the telecom’s DSL package.

The deal calls for Verizon DSL subscribers to receive MSN 8 Internet software, provided they meet a few criteria. DSL subscribers who also use Verizon’s other telecom services, such as local and long distance, will receive the package for $29.95 a month; standalone DSL customers can have it for $34.95. New York City Verizon DSL subscribers will also have access to a Wi-Fi network Verizon has begun setting up in Manhattan.

Verizon Online DSL with MSN 8 will be offered over all of Verizon’s 36 million DSL-capable access lines, which the company said would grow to 46 million by the end of the year. Financial terms of the deal were not disclosed. The pact follows in the footsteps of Yahoo’s co-branded DSL deal with SBC Communications. Since its launch in last June, Yahoo reports the service has attracted nearly 1 million subscribers.

Verizon recently slashed the price of its DSL service to $34.95 a month in an effort to take some market share from the cable companies, which have snapped up the lion’s share of broadband subscribers. According to Leichtman Research Group, of the nearly 16 million homes with broadband access at the end of 2002, cable accounted for 65 percent of connections. Verizon ranked behind SBC as the No. 2 DSL provider with 1.6 million customers.

“This is a totally new approach that brings us to the next generation of broadband for our customers,” said Lawrence Babbio, Verizon’s vice chairman. “We believe that by offering customers a superior value prop we will accelerate broadband adoption and our share of the market.”

The DSL deal is part of MSN’s strategy shift away from fighting AOL for supremacy in the dial-up Internet access business. Two months ago, MSN, which provides dial-up Internet access to about 9 million customers, indicated it would no longer seek to top AOL as the No. 1 ISP, instead concentrating on offering its Internet software as an add-on for broadband subscribers. The move was a dramatic shift, coming just months after the splashy launch of MSN 8, which was meant to go toe-to-toe with AOL 8.0 for the legions of dial-up Internet subscribers.

“It’s a cornerstone of our strategy, which is to deliver the best package of services to consumers,” said Lisa Gurry, MSN product manager. “The movement is toward broadband and we’re embracing that by partnering to bring our services to consumers.”

MSN has inked co-branded high-speed Internet access deals with two other providers, Qwest Communications’s DSL service and Charter Communications’ broadband subscribers. Unlike in the Verizon deal, Charter subscribers will need to pay a monthly fee for the MSN service.

Verizon prepared for the new offering last month by upgrading 10 million lines to be able to carry DSL service. Technical integration issues pushed back the planned launch of the co-branded DSL product. It was originally to launch in the first quarter of this year.

Both MSN and AOL have reported flat sales for their new Internet services, mostly resulting from the large shift of Internet users to high-speed connections offered by phone and cable companies. AOL has sought to capitalize on this shift through its own broadband offering, as well as through a bring-your-own-access (BYOA) plan that offers AOL Internet services for a monthly fee to non-AOL broadband subscribers.

Likewise, MSN offers MSN 8 services, like junk-mail filtering, parental controls, and shared browsing, as a BYOA service priced at $9.95 a month. Last week, MSN and Gateway announced a deal that would bundle the BYOA and regular Internet service offerings on the computer manufacturer’s consumer PCs.

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