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Yahoo Adds Verizon to Its Fiber Diet

1/20/2006 7:03 PM Eastern

Yahoo Inc. appears to be setting itself up as the Internet provider to beat in the fiber-to-the-home service game, announcing last week it’s rolled out a co-branded Internet service riding the Verizon Communications Inc. fiber-to-the-home FiOS service.

Yahoo already has an Internet service deal with longstanding telco partner AT&T Inc. to extend Yahoo service to its fledgling fiber-to-the-home Project Lightspeed initiative. It also has a deal with BellSouth Corp. to start offering Internet service to digital subscriber line customers starting in the second half of this year — and that pact also covers future fiber-optic-driven services.

While still a small piece of the broadband market, the fiber-based residential service segment is a big future growth area for Yahoo. It also plays into the recent wave of Internet video content from Yahoo and others that will require significant bandwidth to support.

Fiber service is “not a huge customer segment now, but it’s growing — and it is an important customer segment,” Yahoo executive vice president of broadband and mobile Steve Boom said. “It’s the people on the front lines of everything that is new.”

Under the co-branding deal between Verizon and Yahoo, Verizon Yahoo will be offered as the default Internet-service provider service in the portions of 15 states where Verizon has lit the FiOS service: California, Connecticut, Delaware, Florida, Indiana, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Texas and Virginia.

Later this year, that list will expand to include Washington state.

Verizon is offering FiOS service through a tier of packages ranging from $34.95 monthly for a 5 Megabit per second downstream connection to $179 for the 30 Mbps package.

Yahoo content offered through the service includes premium on-demand news and entertainment video; personalized homepage features; customizable, commercial-free radio; access to the Yahoo Music library of on-demand music videos; and unlimited photo storage.

AT&T, meanwhile, is now field-testing its Project Lightspeed service in a controlled consumer trial in San Antonio. As the resident ISP for AT&T, Yahoo is involved in that trial on the data side, but not as yet on the TV service, Boom said.

“As video rolls out, our partnership with AT&T does extend to that,” he noted, adding Yahoo demonstrated such a TV service at the Consumer Electronics Show in Las Vegas earlier this month.

Plans are to expand the Lightspeed trial through the second quarter, and if all goes well, the Bell operator may roll out the service in other markets by the end of the year.

September