Cable Fans Cheer SBC Broadband Shift

The one-year, $26.95-per-month deal, which had been available over the Internet, as part of certain bundles and through retailers including Best Buy (BBY Quote), will now be offered only as part of a bundle that includes local, long-distance and wireless telephone service, said Coe.

SBC had seen "tremendous success" selling DSL at the $29.95-per-month price before the promotion, said Coe, "and [we] fully expect tremendous success selling it at that price point in the future."

Cynthia Brumfield, senior communications analyst at the research firm Pike & Fischer, called the broadband Internet market "pretty volatile ... in terms of promotional pricing."

"No one's promising that some of these very attractive promotional prices will last forever," Brumfield said. That's particularly true for telcos, she said, since their operating margins on high-speed service are half those of cable operators.

SBC's Coe also confirmed that SBC cut the price on its Expert Plus package from nearly $100 per month to $44.99. That service enables downloads at speeds of up to 3 mbps and uploads as fast as 384 kbps, three times faster than the upload speeds for basic service. The offer, he said, is "a trial right now to determine whether or not there is a market for that." But Coe said there's no expiration date on that price drop, which he believes is available throughout SBC's service area other than in Connecticut.

That price cut, wrote Shapiro, is clearly a direct response to cable operators' efforts over the past few months to upgrade their customers to 3 mpbs downloads.

Phone companies are feeling "somewhat vulnerable" regarding the download speed limitations on DSL service, Brumfield said. Downloading speed, she said, "is gaining traction with customers, it seems, almost as much as price cuts are gaining customers."