Fast America Online Service Is on Its Way to California.

Knight Ridder/Tribune Business News

Mar. 12 -- The cannons in the war over high-speed Internet access have lobbed more shells into the opposing camps.

The latest volley would allow America Online Inc. subscribers in California to gain access to a fast technology called DSL for connecting to the Internet over standard telephone lines. AOL will market the DSL service to its online customers through a deal with Pacific Bell's Texas-based parent, SBC Communications Inc. The deal teams up the nation's No. 2 telephone company with the No. 1 Internet service provider.

This alliance comes two days after AT&T completed its merger with TCI, a union that gives the telecommunications giant part-ownership of @Home Network, a company that provides a high-speed Internet service via cable television modems.

Providers of cable modem and DSL connections to the Net lately have begun to compete more aggressively on price and availability. In the Bay Area, @Home's cable-modem service costs about $40 a month, and Pacific Bell is charging about $49 for DSL. Cable modems, however, provide a much faster connection to the Net than DSL.

Pac Bell and SBC are gambling that the deal with AOL will provide DSL with a much wider audience of potential subscribers.

"It's kind of a marriage of the things that AOL customers like best about their Internet service provider, combined with high-speed Internet access at a reasonable price," said Steve Dimmitt, Pacific Bell's vice president for consumer marketing.

AOL customers might pay around $42 for a DSL-class connection. AOL subscribers now pay about $22 a month for an Internet connection at standard speeds, and AOL executives estimated that they would charge an additional $20 a month for a DSL link. Those fees are similar to the rates AOL charges for DSL service provided by Bell Atlantic.

"With our growing membership base, we are in the best position to transform broadband technologies to mass market realities," said Bob Pittman, AOL's president.

AOL has become alarmed recently that it could suffer an erosion of subscribers because it has been unable to provide millions of them with a high-speed connection to the Net. The deals with SBC and Bell Atlantic, though, give AOL that connection potential in 21 states.

The deal, however, won't erase the technological hurdles that impede a universal deployment of DSL by Pac Bell and the other regional phone companies.

Although circumstances vary in each city, Pac Bell customers can be no more than three miles away from a central phone office with DSL equipment if they want to receive the service. That means millions of Pacific Bell consumers can't get access to the new service.

What's more, cable modem services are being deployed much more rapidly than DSL so far, according to Patti Reali, analyst with Dataquest, a market researcher.

"Cable modems have a significant lead," Reali said.

About 600,000 cable modems are being used in homes in the United States and Canada. About 62,000 DSL modems have been shipped in the U.S. market, Reali estimated.

"It all depends on who gets there first," Reali said. "And at this point, cable is there first."

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