SBC, Verizon Betting Speed Kills in DSL Race

Another price war is about to ensue in telecom, but there's a twist: This time Wall Street views it as a positive development.

Baby Bells Verizon (VZ Quote) and SBC (SBC Quote) are preparing new low-priced digital subscriber line, or DSL, services aimed squarely at broadband offerings from cable rivals. The new offerings from the telcos mark the first time the industry has moved to beat cable prices on a large scale.

Though DSL has been a deeply unprofitable, cash-intensive business for the phone companies, Wall Street has long worried that in failing to aggressively pursue the broadband market the Bells have been missing a rare growth opportunity. And in contrast to the dwindling long-distance market, broadband looks like a robust business where price competition could hold the key to winning what is expected to become lucrative market share.

"This is the opening salvo to what will be a furious price war," says one New York hedge fund manager who is long SBC.

Rolling Out

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