The Secret Price War For Broadband/Telco Services

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.

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Comments on “The Secret Price War For Broadband/Telco Services”

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Dan Boyce says:

SBC Yahoo! DSL Pricing

When I originally signed on I was paying 29.95 per month. When I *renewed my contract* (this is a key phrase here)I was able to drop back to a rate that was actually lower than the original rate.

It has been my experience that the SBC folks are pretty helpful when it comes to keeping your monthly rates down. All you have to do is communicate with them.

knight37 (user link) says:

You are overlooking...

…the fact that these introductory DSL rates are for slow broadband DSL. I’m not sure what the exact speed is, but for example my brother in law signed up for this and now has “broadband” in the sense that it’s faster than dial-up, but it’s still no match for my cable modem. His download rates are about 150-200kb/sec whereas I regularly get 600-700kb/sec (from the same source). With the large-ass files on the net these days, that’s quite a difference. [shrug] You get what you pay for.

Anonymous Coward says:

Scared of Brand X?

Any thoughts on the timing of SBC lowering the DSL intro price to grab as many customers before the Brand X decision? That decision is looking more and more like it will rule in favor of redefining cable as a telco service and not as an info service. Once that is done, the cable is open for competitive providers. And that in turn competes with DSL.

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