March 10, 2004, 5:05 PM PST
By Jim Hu
Staff Writer, CNET News.com

America Online on Thursday is expected to announce a partnership to offer broadband Internet service through Covad Communications Group.

The deal lets AOL offer its dial-up Internet subscribers speedier broadband access through Covad's digital subscriber line (DSL) service. Covad will handle all billing, customer service and access issues, while AOL offers its familiar interface and content.

Subscribers will have to pay $14.95 a month for AOL for Broadband--a flashier version of the online service--on top of the $34.95 a month for Covad's 1.5 megabits per second connection. That's a $49.90 total monthly fee for subscribers. Covad will also offer a 3 mbps plan for $39.95 later this year. Both plans require a 12-month commitment.

The partnership is different than AOL's previous attempts to sell customers a content and access bundle for $54.95 a month. That arrangement required AOL to lease DSL lines from local phone companies and manage all elements of the service, including customer service and billing.

AOL has since dissolved those leasing deals and has watched a similar partnership with cable giant Comcast fade away. Instead, the online leader hopes people using other broadband providers will want to pay an additional $14.95 a month to access its service.

Appealing to broadband users has been a major priority for AOL. The Time Warner division has watched its narrowband subscriber base steadily decline, culminating in a net loss of 2.2 million subscribers in 2003. However, AOL added 1.2 million broadband members, which includes its "bring your own access" customers, to a total of 3 million subscribers.

Covad will continue to offer DSL access independently. The company also powers DSL service for AT&T.

Story at CNET News.com