AT&T, Verizon Ramp Up DSL Marketing

It is starting to appear that a dramatic second-quarter fall-off in net new broadband access customers at AT&T, Verizon and Qwest was due to marketing inattention by telcos and brisk activity by cable companies. At least, that's what one would surmise based on ramped-up marketing programs AT&T and Verizon now are rolling out.

Verizon Communications Inc., in the second quarter the first telco ever to see a drop in DSL subscribers, now is offering customers six months of DSL service free if they sign up for the company's phone and Internet package. AT&T now is guaranteeing its current rates for two years.

Wall Street Journal staff writer Vishesh Kumar reports that "while the most generous offers are coming from the phone companies, some analysts expect cable companies will also become more aggressive in their own promotions as they compete to retain customers."

Cable and phone companies added 887,000 new broadband customers during the second quarter, half the number they added a year earlier, according to research from Leichtman Research Group.

It wasn't immediately clear, when the second quarter acquisition numbers appeared, what had happened. Basically, Verizon and AT&T experiences an unusual order of magnitude drop in net broadband adds, something completely at odds with several years worth of quarterly additions.

One conceivable explanation was a sudden shift in consumer preferences for cable modem service as compared to DSL. Another partial answer in Verizon's case was that broadband adds increasingly were shifting to FiOS, and away from DSL.

Also, aggressive promotioinal activity by cable companies undoubtedly played a role, combined with some sort of inattention to broadband marketing on the part of the telcos. Whatever the causes, it now appears marketing efforts by telcos will be much more aggressive in the third quarter.