Yahoo in Broadband Phone Pact With BellSouth

By Eric Auchard

Yahoo Inc. and BellSouth Corp. on Monday said they agreed to offer high-speed Internet service across the No. 3 U.S. local phone service provider's nine-state region, moving Yahoo one step closer to nationwide broadband coverage.

In a joint statement, the world's largest Internet media company and the No. 3 U.S. local phone company said the new, co-branded service will start operating in late 2006 and be aimed at BellSouth residential broadband subscribers.

"We believe it will be fourth quarter 2006," Jeff Ezell, BellSouth vice president of business development, said in a phone interview.

Yahoo already has broadband partnerships with SBC Communications Inc. and Verizon Communications Inc., the No. 1 and No. 2 U.S. local phone service providers.

This means Yahoo only lacks a deal with Qwest Communications International Inc., the No. 4 local carrier, to fill out a national map, which would allow it to market its services nationally instead of region by region.

"We are holding talks with a variety of companies globally," Jim Schinella, Yahoo's vice president for business development, said when asked if his company was in talks on a similar partnership with Qwest Communications.

Yahoo shares gained 70 cents, or 2.1 percent, to $34.22 in late afternoon trading on Nasdaq. BellSouth shares dipped 12 cents to $24.92 on the New York Stock Exchange.

Over the past year, Yahoo has signed similar broadband partnerships with Verizon and Canadian broadband cable service provider Rogers Communications Inc. and expanded pacts with SBC and Britain's BT Group Plc while it continues to hunt for further deals.

Yahoo's partnerships with broadband service providers involve jointly developing a special browser that prominently features links to various Web services offered by Yahoo and the local broadband providers.

The co-branded BellSouth Yahoo service will be available to all three tiers of broadband service now offered by BellSouth. BellSouth counts

2.4 million subscribers to its broadband services.

The phone company provides a "DSL Lite" version at 256 kilobit per second download speeds starting at $24.95 per month. It offers a 1.5 megabit speed for $32.95 and its top-tier 3 megabit per second service for $42.95.

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[TELECOM Digest Editor's Note: Is this the same 'Bell South' which has thus far been unable/unwilling to restore even a modicum of basic phone service to the areas of New Orleans which suffered heavily from the Katrina/Rita storms? The same 'Bell South' which has largely written off much of 9th Ward New Orleans almost entirely? Or is it some other company with the same name? PAT]