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Companies quiet about DSL sans phone

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Kai Ryssdal: Used to be that you could get a DSL connection -- that's a phone-based Internet hook-up -- only if you bought residential phone service as well.

Somewhere near 32 million Americans only use their cell phones -- no landline -- but they want to get online too, which has made stripped down high-speed Internet a hot commodity.

Katie Macpherson reports.


Katie Macpherson: Do you have an urge to get naked?

Frank from "Old School": We're going streaking!

Not that kind of naked. I'm talking about high speed Internet that comes through a phone line. If you take just that service and not phone service, you've got "naked" DSL.

Teresa Mastrangelo: I still can't believe we even use that phrase.

Teresa Mastrangelo is an analyst with market research company Broadband Trends. She says until recently telephone companies kept naked DSL under wraps.

Mastrangelo: They didn't want a customer to stop paying for their telephone service and just take the broadband connection.

Analysts say there is a high demand for naked DSL, especially among young college grads who are dumping landlines in favor of cell phone service. A recently released federal survey says nearly one out of every six American homes had only cell phone service in 2007, up significantly from the year before and that means the demand for naked DSL is growing.

But providing just Internet scares phone companies who fear that customers could end up switching more easily to other providers.

Mastrangelo: As customers turn off their fixed-line telephone and go directly to a mobile telephone, there's obviously a loss of revenue associated with that.

They may not like it, but phone companies are coming up with ways to compromise with their phone-free consumers. AT&T has a sneaky solution: Distract customers from opting for their $20 per month DSL service by advertising an attractive package that includes cell phone service.

[AT&T Commercial]: Welcome to getting together, where you bundle and win!

Thirty percent of AT&T's new DSL subscribers in 2008 got naked DSL and about half of those customers swallowed the bait and took packages with cell phone service.

But what about customers who don't want to get cell service from their DSL provider? They could drop as much as $60 a month on just the DSL connection, depending on the company. Research firm TechDirt's CEO Mike Masnik says telcos aren't going to make it very cheap or easy to get just naked DSL.

Mike Masnik: They're never gonna make it appealing in any way and they're always gonna try and hide it and try and make all sorts of other packages a lot more appealing.

So don't expect to see telephone companies letting it all hang out anytime soon.

In Washington, I'm Katie Macpherson for Marketplace.

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