Incumbent Carriers

Kings of copper pack their pipes for profits

With broadband creeping like kudzu toward their customers neighborhoods, incumbent carriers are packing copper pipelines with new services, from long-distance to video, in hopes of boosting revenue per line.

Profitability and higher prices look ever more certain these days. As upstart local competitors wither on the vines, Congress and regulators look for new ways to liberate the regional Bells, who are taking back premium customers once "cherry-picked" by upstarts such as Covad Communications, NorthPoint Communications and Rhythms NetConnections.

Some analysts have observed that regional Bells dont mind merging with one another — witness the absorption of Ameritech by SBC Communications — but they are loathe to compete. Verizon Communications is rapidly retreating from its OneSource plan — which was an effort to compete on the turf of SBC-owned Pacific Bell — after posting major losses.

But the regional Bells are still testing the waters of competition mandated by the Federal Communications Commission in exchange for entering the long-distance market. New York-based Verizon, for example, is targeting high-density residential buildings in Atlanta, Denver and Phoenix through its Verizon Avenue subsidiary.

For Verizon and the other regional Bells, the tantalizing prospect of delivering bundled services that include long-distance and video-over-DSL could prove irresistible. With a complete package, the Bells could compete with AT&T Broadband across the board.

Qwest Communications International, the upstart optical fiber carrier that acquired regional Bell U S West, is making a move to expand its video service over Very-high-speed DSL for the first time. The effort, pioneered in Phoenix, is spreading to Denver, Qwests hometown. That service finally gives Qwest a video weapon to use against AT&T, which has made major incursions into the Denver market with a full array of Internet, video and telephone services at comparatively low prices.