SBC’s new pricing is nearly $10 lower than AOL’s price for standard dial-up service, providing dial-up customers with additional incentives to migrate to faster broadband connections.
But the real aim, analysts are saying, is to keep those customers away from SBC’s primary rivals, cable Internet companies, which typically charge between $30 and $50 per month for high-speed service.
“It definitely undercuts competitors such as Verizon and makes the prices that cable giants such as Comcast charge for their broadband sound downright luxuriously expensive,” Motley Fool’s Alyce Lomax said.
The offer is available only to new subscribers who commit to a one-year contract.
“The offer will be available for a limited time,” Destiny Belknap, an SBC spokesperson, said. “No ending date has been set.”
SBC currently has 5.6 million DSL customers.
According to online research firm eMarketer, more than 34 million U.S. homes, around 30 percent of all households, have broadband connections. eMarketer predicts that number will rise to 69.4 million homes, or 56.3 percent of households, by 2008.
Cable companies currently own around 60 percent of the broadband market, and have held strong on pricing. But this latest price challenge from SBC could force cable companies to follow suit.
Meanwhile, the Swiss-based International Telecommunications Union has announced a new DSL standard that it said offers speeds up to 10 times faster than those now offered by U.S. carriers.
With upstream and downstream speeds of up to 100 megabits per second, the new technology would potentially give DSL providers a competitive edge by enabling them to offer services such as high-definition TV and better-quality video on demand.
But Leichtman Research Group founder Bruce Leichtman said the new standard is still prohibitively expensive and is unlikely to be commercially viable for several years.
“The chord that DSL has struck has been the low-price chord,” Leichtman said. “Clearly, the carriers are not going to offer 100 megabits at $30 a month.”
