Verizon Dresses Up DSL

Forget free Flip cameras or gift cards. Verizon Communications Inc. (NYSE: VZ) has launched a new DSL pricing strategy, hoping to lure its remaining dialup Internet customers into broadband by lowering prices and eliminating contract requirements. (See Verizon Cuts DSL Prices, Contracts.)

For $40, consumers who order service online can now get unlimited local and toll calls (that means short-distance long-distance calls) along with 1Mbit/s High Speed Internet (HSI) and, if they choose, add a DirecTV video package at a discount. Unlimited long-distance adds $10.

That's about as low as Verizon can go and still maintain its margins, says Rick Yorra, manager of consumer core strategy. The new strategy will replace promotions such as free Flips or notebook computers -- those proved "difficult to manage," he says. Consumers who don't order online will pay $5 more as Verizon continues to push its self-service strategy.

Through focus groups and other market research, Verizon determined that consumers wanted value without contracts -- thus the new pricing, Yorra says. Consumers wanted an option to avoid buying more expensive long-distance service as well.

For $15 more a month, consumers can add the fastest broadband speed Verizon can provide at their location, which could be as much as 15Mbit/s for those lucky enough to live close to a central office. Those two pricing tiers -- 1Mbit/s or fastest available -- are the only two remaining.

Why this matters
Verizon is best known for its FiOS services, but almost 11 million of its 26 million households don't have fiber-to-the-home and, as that construction program winds down, won't be getting it. Verizon has launched this strategy to boost its appeal to those customers and get the stubborn dialup crowd to submit to broadband.

For more
Here's a look at some of Verizon's other moves on the consumer front:

• Ambeault: The Answer Man
• Verizon's Bold Broadband Ambitions
• TelcoTV 2010: Verizon Takes a Flex View of the Cloud
• Verizon Ready for ūmi Mania
• Has Verizon Made Its Last DSL Boost?
• Verizon White Labels Two DSL Offers

&mdash Carol Wilson, Chief Editor, Events, Light Reading