SBC, Yahoo in joint venture launch Internet service

By David Koenig AP Business Writer
Tuesday June 04, 2002

DALLAS – Phone company SBC Communications Inc. and online giant Yahoo! Inc. have teamed up to launch an Internet service they hope will challenge AOL and Microsoft for dominance of the dial-up market. 

SBC and Yahoo plan to add a cobranded high-speed Internet access service this summer. SBC is a leading provider of faster, so-called broadband service. 

The companies did not disclose financial terms, but officials said SBC and Yahoo will share revenue from online advertising and commerce. In addition, Yahoo will receive a portion of every monthly subscription service, they said. 

The service, called SBC Yahoo Dial, will charge $21.95 per month; less for customers who order other services from SBC. 

Despite its relatively slower speed, far more U.S. households still use dial-up service instead of high-speed access through phone lines or cable modems. Jason Few, an SBC vice president working on the joint venture, said dial-up is not a dying technology. 

“I don’t see the dial-up business going away for quite some time,” Few said. “We have an opportunity to grow our share.” 

San Antonio-based SBC has 1.8 million dial-up subscribers, who will be folded over into the joint venture. 

The SBC-Yahoo partnership was announced in November, but the companies had not disclosed many details until Monday. SBC Yahoo Dial is being advertised online and by direct mail, with a radio and newspaper advertising campaign expected to begin in about two weeks. 

Frederick Moran, an analyst for Jefferies & Co., said the venture represented an attempt by Yahoo to barter its Internet name for subscription-service income. 

“It’s a sensible way for Yahoo to capitalize on their Internet name, but whether this will lead to additional profits remains to be seen,” Moran said. “The demise of Internet advertising is still a big overhang for Yahoo stock.” 

Yahoo claims a user base of 237 million people for its Web site. The Sunnyvale, Calif.-based company lost $93 million on revenue of $717 million last year, while SBC earned $7.2 billion on revenue of $45.9 billion. 

In trading Monday, shares of SBC fell $1.14 to $33.15, and Yahoo shares slipped 34 cents to $15.68.