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October 18, 2004

SBC Wields Its Big Stick

By Glenn Fleishman

SBC officially announces $1.99 per month unlimited hot spot services: If you subscribe to SBC’s DSL service at a rate as low as $26.95 per month for their cheapest service, you are entitled to unlimited Wi-Fi hot spot service for $1.99 a month with a one-year commitment — after receiving free service until April 2005.

This gives SBC a giant sledgehammer to wield against the cable vendors trying to encourage people to sign up for ever-slower cable service. I’ll confess that I’m biased against cable because of the pooled bandwidth/pooled network approach. Cable modem providers initially had no protection against entire neighborhoods seeing each other’s networks. Then they restricted upload speeds to 128 Kbps on most links to defeat “servers.” Because bandwidth is pooled, it means that each neighborhood on a cable head end has a finite amount of bandwidth—the more subscribers, the more frustration.

Meanwhile, DSL started out a little slow with odd problems, erratic service, and confusing installations. But with more experience, the telcos started to get it right, along with the last remaining competitive DSL provider, Covad. Now, most DSL installations are self-service. DSL offers a point-to-point link with a fixed amount of bandwidth; upstream of that, you might argue that bandwidth is pooled, but it’s pooled on an ATM port, not on a tiny pool of cable bandwidth far from the backbone.

Consumer DSL can now top out at 6 Mpbs down and 768 Kbps up for under $100 per month, while the most competitive offerings against cable offer equal or higher uploads and a T-1 for downloads (1.5 down, 128 to 384 up). Cable companies have responded, but still mostly lamely.

SBC’s full-court press includes its sale of Wi-Fi gateways to DSL customers—over 3,000 per day at last report—and building out its own Wi-Fi hotspot network. Given SBC’s cost structure in offering hotspot service, they aren’t selling it well below cost. This internetnews.com story reports that SBC has sold a million Wi-Fi gateways, and has 4.3 million existing DSL customers.

Now, Comcast, Time-Warner, et al., can enter the competitive marketplace rather easily in one sense: Wayport is willing to resell its McDonald’s access to all comers who will pay the fixed monthly rate per location. But they’ll have to play catch-up to get other outlets. Will SBC resell The UPS Store to cable companies? Time will tell.

The most interesting part of the SBC deal is airports: the more airports SBC has, the more likely that SBC-territory business travelers will switch at home from cable or sign up for DSL in order to use unlimited airport time. SFO is part of T-Mobile’s network and only available at their hourly and day rate, but Seattle, San Jose, Austin, Dallas, and a few others are in Wayport’s system.

(This story must have slipped out early on Bloomberg’s wire service, as the report first surfaced on Oct. 16 from that news organization.)

Posted by Glennf at October 18, 2004 8:25 AM

Categories: Hot Spot

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SBC today announced a DSL and WiFi access bundle. If you purchase the SBC Yahoo! DSL product, you can bundle in FreedomLink for only $1.99 per month. Glenn Fleishman, at Wi-Fi Networking News, has an analysis of the offering. [Read More]

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Tracked on October 18, 2004 6:36 PM

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