Bells Find Sweet Spot With Lower DSL Prices.
DSL Providers Make Subscriber Gains, Spark Ad
Wars With Cable.
In a classic duel of price vs. speed, the Baby
Bells are stepping up their latest campaign to undercut rates
for cable modem service and lure more dial-up Internet users to
DSL, with some notable successes.
BellSouth, Qwest Communications, SBC
Communications and Verizon Communications have all introduced
DSL offerings priced at less than $30 a month, at least $10
below the typical cable modem offering. In fact, both SBC and
Qwest are now charging DSL users as little as $27 a month as
long as they take several other phone company services as well.
For example, Qwest is now offering its Qwest Choice DSL with MSN
Premium product for $26.99 a month as long as subscribers also
buy one of its residential phone packages or purchase either a
DirecTV or EchoStar satellite TV package from it.
"We believe we provide the lowest price out
there," said a spokeswoman for Qwest, which introduced its
latest pricing plan in mid-December. For that reason, she said,
the Bell sees no reason to offer a sign-up discount, unlike
several MSOs that now feature special introductory offers.
Qwest, the smallest of the four Bells, added an impressive
60,000 DSL subscribers in the fourth quarter to close the year
with 637,000.
In response, cable operators are boosting their
broadband speeds and trotting out more sign-up discounts. Over
the past few months, such major MSOs as Comcast, Time Warner
Cable, Charter Communications, Adelphia Communications and
Mediacom Communications have all boosted their data download
speeds to 3 megabits per second (Mbps) or higher, faster than
nearly all DSL services.
After years of pooh-poohing the idea, U.S. cable
operators are finally starting to tinker with their own
lower-speed/lower-priced data products too. Comcast, Time
Warner, Charter and Cox Communications are all exploring the
idea, following in the footsteps of leading Canadian MSOs Rogers
Communications and Shaw Communications.
Cox, for instance, has quietly introduced a
"value-priced" cable modem service in seven markets throughout
the U.S. Subscribers pay as little as $24.95 a month for a
broadband connection with symmetrical download and upload speeds
of 128 kilobits per second (kbps), about twice as fast as the
highest dial-up speeds but far below the speeds of Cox's
flagship data service.
The new price vs. speed battle comes as the phone
companies, fresh from their best quarter ever for new DSL
subscriptions collectively, are making unprecedented strides
against cable MSOs. Although cable operators continue to command
the North American residential broadband business with a 64.5%
market share, cable's share of new broadband subscribers slipped
below 60% for the first time in the fourth quarter, falling to
56.4%. In contrast, DSL providers picked up more than 40% of new
broadband subscribers for the first time.
"We just had our best quarter in the last two
years," boasted a spokeswoman for Verizon, which picked up
203,000 DSL subscribers in the fall to end the year with more
than 2.3 million. Similarly, SBC added a record 377,000 DSL
customers to close 2003 with more than 3.5 million.
