SBC's DSL price dips below some dialup plans

A $14.95 per month promotion that SBC Communications launched Wednesday took its price for DSL (digital subscriber line) broadband significantly below brand-name dialup Internet services, which offer only a small fraction of DSL's performance.

The move by the U.S. regional carrier, which calls itself the biggest DSL provider in the country with 5.6 million lines in use, turned up the heat in a competition for high-speed subscribers that pits carriers against each other and the cable companies. All want to capture customers for potentially lucrative "triple play" bundles that include data, voice and video. Research company IDC estimates the number of broadband households in the U.S. will grow 18.5 percent per year between this year and 2009.

The offer is only for new users of the SBC Yahoo DSL Express service who sign up for a 12-month contract and buy SBC local phone service, and it is for a limited time, according to an SBC statement. However, the company has not determined when the offer will expire, said SBC representative Wes Warnock. The DSL Express service offers between 384K bps (bits per second) and 1.5M bps of bandwidth. Also Wednesday, SBC rolled out a similar offer for its SBC Yahoo DSL Pro service (1.5M bps to 3M bps) for $24.99 per month.

By contrast, dialup services top out at 56K bps and cost more than $20 per month at the regular price from major service providers such as America Online and Microsoft's MSN.

"SBC is now down in the dialup price range," said Ovum analyst Jan Dawson. The move is a way to reach yet another untapped segment of price-sensitive potential customers after millions of average consumers followed early adopters into the high-speed services, he said. Dawson doesn't think it's a short-term gimmick. "Companies like SBC don't do things like this if they can't make money from them," he said.

Carriers are in an ongoing battle with cable companies, which were first to offer broadband in the U.S. and still have more high-speed customers than do the DSL providers, he said. The cable operators have focused on generally superior bandwidth -- typically 3M bps to 10M bps -- at prices starting around $40 per month. The carriers tend to play the price card, and at the moment they are narrowing the subscriber gap, Dawson said.

In global terms, DSL pricing in the U.S. is competitive with most developed countries, though consumers in some countries, such as Japan and South Korea, get more bandwidth for about the same price, he said. In most of the world, DSL is the major form of broadband because cable penetration is not as high as in the U.S., he added.

SBC's regular price for DSL starts at $19.95 for customers who buy a bundle that includes unlimited local and long-distance phone service. It costs $29.95 per month for customers who don't get a special bundle, although all customers must have at least a basic SBC phone service in order to buy SBC's DSL, said company spokesman Michael Coe. That local line costs about $10 to $12 depending on local rules, Coe said.

The carrier charges as little as $9.95 per month for dialup in a bundle with landline and wireless phone service and satellite TV. That price is also available to the 24 percent of SBC customers who can't yet receive DSL, Coe said. SBC's no-strings-attached dialup price is $21.95 per month. The carrier has about 1 million dialup customers, Coe said. SBC serves customers in 13 states, including California and Texas.