Some Hands-On Reporting

DSL Frontlines

SAN FRANCISCO -- With the TaskMrs. and I in the hunt for a new PC, and interested in getting high-speed DSL service, Monday's combination deal from SBC Communications (SBC Quote - Cramer on SBC - Stock Picks) seemed a perfect fit.

If only we lived in a perfect world.

A call to the local PacBell service center revealed a DSL line could be "provisioned" in our apartment and a self-install package sent out within two weeks. Way cool, I thought, having expected a far longer wait time.

But the offer lost some of its allure when the PacBell rep said it would take up to 30 days to get the PC, despite the nearly $200 shipping fee.

"This is a fully tested, customized PC configured to work plug 'n' play right out of the box" and thus demands a bit more time to assemble than a standard PC, Jason Few, vice president of broadband communications at PacBell's parent company, SBC, explained later in the day.

Still, it's a little strange the commodity throw in part of the deal would be harder to get than the exotic DSL service, isn't it?

The PacBell rep referred me to Compaq when I asked about upgrading the PC. The model offered is probably fine for our basic at-home needs, but I was hoping for a little more power than 566 megahertz and certainly more memory than the 64 megabytes offered.

But Compaq's sales center revealed the only upgrades available with the promotion were for accessories such as the monitor and speakers -- not for the guts of the machine. Also, the Compaq rep said I'd have to go back to PacBell to order any upgrades, which is the exact opposite of what PacBell had said. (Oy.)

SBC's Few said upgrades of memory and power are available, and promised to get back to me regarding that issue.

The final deal-sourer was finding out it would cost us $900 in the first year and $450 in the second to terminate the two-year commitment for PacBell's combination DSL/PC service. I just don't want to be locked in for that long because of the potential for DSL prices to fall further or other services to become available -- and because PacBell was hazy about what happens if we move during the commitment period.

Few seemed confident (of course) that we wouldn't have any need or desire to cancel during the two-year period and that, in fact, we'd likely sign up for more time at the end. Still, it seemed PacBell's standalone DSL service was a better option for us and better for SBC, too. At least at first glance.

The standalone DSL service costs about $40 a month, or $480 a year. For the sake of argument, assume we'd sign up for a second year at the same price, resulting in an outlay of $960.

The DSL-PC package costs $60 a month and requires a two-year commitment, or a total of $1,440. If, as The Wall Street Journal reported, SBC is paying $600 per computer, then it is charging $840 for the DSL portion of the promotion.

Ahh, the perils of assumption (and believing everything you read).

An SBC spokesman and Few each said the $600 price is incorrect, implying it was inflated. However, neither would reveal the actual price, citing confidentiality agreements with Compaq.

"I can tell you it is a solid business decision from an offer standpoint," Few said. In addition to the recurring revenue stream of the two-year commitment, the deal benefits SBC because of an expectation most customers will choose self-installation (vs. immolation), saving the customers and the company the cost and potential headache of a technician's house call. Finally, the company plans to roll out new services such as video, voice and educational products that will create opportunities to generate additional revenue during the period of the promotion, he added.

SBC's main incentive for the PC offer is its belief it will expand the market for its broadband services, Few said, predicting signups will run "significantly in the six figures," helping SBC hit its target of 1 million DSL subscribers by year-end.

"We absolutely will hit our projections" for DSL subscribers, he added, in contrast to other Baby Bells, which have uniformly retreated from their original targets.

Still, I declined SBC's offer because of my aforementioned qualms about the PC and the two-year commitment. But I did sign up for the standalone DSL service. Given that's SBC's true endgame, it seems the campaign is destined to be successful after all.