AT&T Moves To Upgrade Dial-Up Customers To Broadband

AT&T subscribers won't see flashy marketing and ad campaigns to promote a flat-fee service for the dial-up Internet access the San Antonio, Texas, carrier plans to initiate by the end of this year. In fact, the company would just as soon sweep the announcement to double the flat monthly fee under the rug.

As broadband services have become available at attractive prices, consumers are increasingly making the move from dial-up. To remain competitive, AT&T will update its pricing for new dial-up orders to $22.95 per month. The pricing--competitive with Verizon and others-- will provide unlimited dial-up service without a term commitment, according to an AT&T spokesperson.

"The small percentage of remaining AT&T dial-up customers will see an adjustment to their current price plan, though many may instead choose AT&T's broadband services beginning at just $10 per month, an option available to many dial-up customers within the company's traditional 22-state service footprint," she says. "A satellite-based broadband service is also available to customers who live beyond the company's traditional service area."

New services--such as satellite-based broadband through AT&T's partnership with WildBlue, or 3G laptop cards for customers who live within 3G markets--provide other options. Services are marketed and made available through AT&T's Web site, direct mailing pieces, and call centers.

About 17% of U.S. households still rely on dial-up to access the Internet, compared with 48% that use broadband, according to Sally Cohen, a consumer telecom analyst at Forrester Research. It is interesting to note, she says, that 32% of U.S. households still don't have Internet access at all.

"AT&T has been doing some interesting things with pricing, as part of the merger agreement with BellSouth, but to be blunt, they are not focused on the dial-up consumer," Cohen says. "I'm not suggesting AT&T will lose subscribers, because there are a number of things that tie consumers to services."

Forrester Research calls those things "consumer inertia"--avoiding the hassle of changing providers, transferring information, signing up for services, and creating a new relationship.

Perhaps it is pure perception, but analysts think raising dial-up rates sends a message that AT&T no longer wants to support subscribers. "They're aware raising prices will likely drive some customers away, but hope it leads more to broadband services," says Jan Dawson, VP at Ovum. "AT&T wants broadband to become the anchor for bundled services, such as voice, television and wireless, and dial-up doesn't fit into that picture."

Increasing quarterly profits mean that AT&T must raise average revenue per user by up- and cross-selling services. So, the carrier launched bundled and promotional services in the past year in an effort to make broadband truly affordable. Pricing starts at between $15 and $20 for slower speeds, and ranges between $50 and $70 for faster speeds.

Analysts say that rather than call attention to the increase in dial-up prices, AT&T has focused marketing efforts on moving subscribers to broadband, and then adopting bundled packages that might include cellular and U-verse services. In an ideal scenario, the carrier would cover all residential services--for example, AT&T's Television, Broadband and Wireless Services, a three-screen initiative pushing video programs to multiple devices, from TVs to computer screens and cellular phones.

Dawson says satellite provides another option, but those living on the north side of an apartment building might have more difficulty receiving a signal, because "to get satellite service you typically need a view of the southern sky."

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