AOL partners with Covad to offer broadband service

In an effort to rev up its broadband service subscriptions, America Online Inc. (AOL) is partnering with high-speed Internet access provider Covad Communications Group Inc. to offer AOL content and services over Covad's broadband connections.

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Under the deal, Covad is offering a stripped-down version of its Covad Broadband Connect connection service for $34.95 a month, and subscribers can sign up for AOL for Broadband at an additional cost of $14.95 a month.

The $34.95 broadband charge, which offers connection speeds of up to 1.5Mbps downstream and 256Kbps upstream, is a discounted rate from Covad's normal prices, an AOL spokeswoman said.

The agreement with Covad follows AOL's decision to back away from offering its own bundled broadband service in January. While AOL has not announced partnerships with other broadband providers, the spokeswoman said that the deal with Covad is not exclusive and fits with the company's "bring your own access" strategy.

The move is a good idea for AOL, according to Jupiter Research Inc. analyst David Card. "The service is targeted at AOL's existing dial-up base and they have proven that they are willing to pay for premium services," Card said.

While the $49.90 a month total price tag may cost more than other broadband offerings, AOL does offer comprehensive services, Card said.

AOL isn't the only heavyweight content provider teaming with an access provider. Yahoo Inc. has a similar deal with SBC Communications Inc. and Microsoft Corp.'s MSN has an agreement with Verizon Communications Inc.

Covad is a smart choice for AOL, Card said, given that the San Jose, California, company is a national provider.

Covad's Broadband Connect product is available across the U.S. in 96 metropolitan areas. A higher speed version of the connection plan, offering a downstream speed of 3Mbps and upstream speed of 384Kbps, will be available later this year for $39.95 a month, the companies said.

AOL has been working for some time to convert its wide base of dial-up users to broadband services. The company said that it added 1.2 million broadband members last year, bringing its total high-speed audience to 3 million users as of Dec. 31. By partnering with access providers, the Dulles, Virginia, company is free to focus on broadband-tailored content and services.