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Verizon deal will increase broadband access to MSN

Microsoft is to team up with Verizon Communications to deliver its MSN Internet service to Verizon's high-speed Internet customers in the USA.

Chief executive of Microsoft Steve Ballmer and Verizon chief executive Ivan Seidenberg announced the alliance between their companies' respective Internet services divisions, MSN and Verizon Online, yesterday (20 June).

The MSN Internet Service is Microsoft's answer to services available through competitors such as AOL Time Warner. As with AOL's Internet service, MSN subscribers sign on to the Internet with portal software that gives users access to e-mail, streaming media and entertainment programming as well as online shopping.

Verizon Online DSL with MSN will be an enhanced version of Verizon's current offering, with some of the new services requiring additional fees, the companies said. It will be launched with the release of version 8.0 of Microsoft's MSN software and will include services in addition to those currently available to subscribers, Ballmer said. The special Verizon services will include online file-sharing, Internet-based voice services and unified messaging, Microsoft said.

Ballmer characterised such fee-based services as something "that people expect over a broadband link." The company has been developing some Web-based services based on its emerging .net initiative, although plans to deliver those to consumers have stalled.

The company has committed to spending about $500m this year in research and development of broadband services, Ballmer said.

Microsoft and Verizon last month teamed up to offer MSN services on Verizon wireless devices. The two companies said they plan to allow customers who purchase MSN broadband through Verizon to link that to the previously announced wireless data services.

The deal calls for MSN and Verizon Online to market and sell the service to the 34 million Verizon customers who can get access to DSL. The service is expected to be available in early 2003.

MSN Broadband is currently available to customers through partnerships with other high-speed Internet providers, at prices ranging from $39.95 to $49.95 per month. Pricing of the service through Verizon Online was not disclosed.

Top Microsoft officials have declared expanding the number of US broadband users a top priority, in part so it can make available new Web-based services to customers.

"There's at least 30 to 40% of US households that I think ought to have broadband that don't have it today," Ballmer said.

Its partnership with Verizon marks the second major broadband deal Microsoft has signed under which it will provide online services for customers directly through a service provider. In April 2001, MSN struck an alliance with Qwest Communications International to deliver MSN-branded broadband and dial-up Internet access in Qwest's 14-state local service area. The Qwest partnership will be unaffected by the Verizon announcement, Ballmer said.

Microsoft also resells broadband and dial-up Internet access under the MSN brand through various partner ISPs. The Verizon and Qwest deals are different in that those two companies have agreed to market MSN over competing services.

Additionally, Microsoft signalled that it would continue to announce partnerships to bring high-speed Internet services to customers that are not served by Qwest, Verizon, or the other MSN partners that provide high-speed Internet services over phone and cable lines.

Verizon Online offers dial-up and broadband Internet access to consumers or businesses in its local service areas around the USA. For example, Verizon had 1.35 million DSL connections in service at the end of May in New York, according its Web site. Fifty-five percent of Verizon's 61.2 million access lines are "DSL ready," and it expects 62% of them to be operational by the end of the year, Verizon said.

MSN has about 7.7 million Internet subscribers, which includes dial-up and broadband users, the company said.

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