The Secret Price War For Broadband/Telco Services

Overhype

from the try,-try-again... dept

Back in October we noted that SBC had dropped their introductory DSL pricing down to $20/month for new customers — pointing out that this was cheaper than dialup in many cases. Apparently not cheap enough, however. SBC is now making waves for lowering the price down to $15/month for new customers with a one year contract. While the Reuters report talks about cheap service and competing with cable, it sort of glosses over the fact that this is a promotional rate only — and it’s unlikely to remain that cheap for customers who stick with it. A few years back when I signed up for cable modem service, it was $20/month for the first six months as well. Still, though, SBC makes it clear why they’re doing this: “What we find is if you sell DSL, the customer just doesn’t churn… Once you get them, you’ve got them.” Hmm, that sounds like a plan of someone planning to jack up prices eventually, doesn’t it? All this really is about is a struggle for marketshare with cable companies, and both are trying to do very similar things, but are trying to avoid a public price war by describing what they’re doing in different ways. For example, Cablevision has basically taken the same approach, with a cheaper “bundle” for new customers, while describing their VoIP offering as being “free”. So, if SBC is offering super cheap data, but expensive voice (still required, of course), and Cablevision offers cheap voice, but expensive data, is it really all that different? Both sides are simply recognizing that everything is about marketshare these days — and the more services they can get people to sign up for, the less likely they are to churn down the road — even when the companies try to jack up prices.