February 3, 2006 8:24 AM PST

AT&T brings new low to DSL prices

AT&T announced on Thursday that it has cut introductory prices on its high speed Internet service to the lowest level yet: $12.99 per month.

The $12.99 price is for download speeds up to 1.5 megabits per second. The carrier is also offering a higher-speed service for $17.99, which provides download speeds from 1.5mbps to 3mbps. The promotion is only for new subscribers, and the cutthroat pricing lasts only a year. After that, the monthly charge jumps to $29.99 for the lower-speed service and $34.99 for the higher-speed service.

But the new deal comes with a couple of catches. It only applies to customers who order the service online, and it also requires people to subscribe to one of the company's local phone service plans, which start around $10 per month.

AT&T and Verizon Communications have successfully used price cuts over the year to lure customers away from dial-up access onto their broadband services. Last summer, AT&T (then SBC Communications) was the first of the two large phone companies to reduce the price dramatically--to $14.99 for the first year of service. Verizon followed a few months later with a new tier of service offering 768kbps downloads for $14.95 per month.

The price-cutting strategy has worked well for the phone companies, as they have each racked up record levels of new DSL subscribers in the months following the new promotions.

Meanwhile, cable operators have resisted national price cuts on their service. Instead, these companies continue to compete on speed. They also push the value of their service bundles, which include high-speed Internet access, telephony and television.

The phone companies are slowly assembling their own service bundle to compete with the cable operators. Verizon is using its new Fios, a fiber-to-the-home network, to offer its TV service, which is already up and running in several communities in Texas, Florida and Virginia.

AT&T, which is using a combination of fiber and VDSL technology to increase broadband speeds, is testing its TV service in Texas. It plans to roll out the service more widely later in the year.

Cable operators have responded to the phone companies' threats with some limited price cuts or supercharged broadband speeds, especially in areas where Verizon's Fios competes.

15 comments

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AT&T DSL Prices
AT&T can't go low enough for me to use their service. Their CEO
has made statements recently about extorting money from content
providers like Yahoo, Google, MSN, Amazon and others for
highspeed to their subsribers. I am certainly not going to signup
for highspeed services with a company that artifically lowers
bandwidth to the sites I access because they haven't paid their vig
this month.
Posted by tleone31 (1 comment )
Reply Link Flag
Charging for content
Yes, but if they start charging for content, not only will that cause potential legal issues from web sites and customers alike but it will also cause them to lose their coveted "common carrier" status, making them subject to a ton of regulations. I don't see it happening. I think a lot of it was a "feel the water" scenario to see if they thought that anyone would notice -- which we have.
Posted by JLBer (100 comments )
Link Flag
Verizon
It was actually Verizon that is trying to do that you can find the article at

<a class="jive-link-external" href="http://businessweek.com/technology/content/feb2006/tc20060202_061809.htm" target="_newWindow">http://businessweek.com/technology/content/feb2006/tc20060202_061809.htm</a>
Posted by swilson2000 (15 comments )
Link Flag
They forgot something...
Who their customer is. :) The idea of charging Google, or Yahoo for better access to the users at the other end made good business sense if you turned the tables on who is the customer of the service they provide. They came into the thought that "Google is using my bandwidth" and forgot that "My paying customer is using my bandwidth" which is the reality of the situation.

It is hardly a new idea either, some companies have set up what they call "peering" agreements where they get better throughput between providers. This is how they should approach Google, Yahoo and others. Making it a value add to both the subscriber and these online service providers.

Verizon comes out saying "peered with Blizzards' World of Warcraft, have no lag while playing WoW on our DSL!" and they sure would gain some subscribers in a flash and a hurry.
Posted by zaznet (1138 comments )
Link Flag
We need wireless to aid in competition
I'm tired of the duopoly between cable and phone. All they do is add extra fine print to any price reduction.

I'm hoping once wireless gets more acceptable, it will add another layer of much needed competition.
Posted by bobby_brady (765 comments )
Reply Link Flag
yeah, i could use it
I could use some sort of broadband connection at home. I live just beyond my local company's dsl line service, and they have responded several times to my requests with the response of they are planning on expanding. This has been going on forever, and the only other competitor who could offer me a service refuses to come into my town as the local company has all the rights to the lines and would force them to lay their own or pay tolls to use their lines, thus, I sit at home on a dial up.
Posted by techguy83 (295 comments )
Link Flag
I agree on needing wireless for competition...
I'm also fed up with the lack of competition, but if you have ANY
reasonable competition, consider yourself lucky.

So far, it's STILL Comcast here, and I hate 'em because they're
nothing but a bunch of greedy pigs.

If any type of viable alternative comes here, I'll dump Comcast
even if it's the same pricing/service, just because I've grown to
dislike them so much.

Perhaps some year, WiMax will finally be a reality.

Chuck
Posted by chuck_whealton (521 comments )
Link Flag
DSL is already there...
You have to realize that DSL is becoming an open market. Yes it's still cheaper to get one provider if your local telco is the same company as the DSL provider. The Cable companies got a strong head start because the local telco was unwilling to sell the new service that was a direct threat to their existing primary money maker.

Cable companies have themselves to blame for this competition too. They started to do what the Telco feared and offering phone services. You also have services that are network independant such as Vonage picking up speed. Phone carriers also have strong competition from Cellular services.

I hope that I'm not the only one who finds the return of AT&#38;T rather amuzing given their scope of services today. :)
Posted by zaznet (1138 comments )
Link Flag
"Sir, please keep your voice down"
For the life of me, I just don't understand the brains at work in
the telecom companies.

Why can't ATT just go ahead and set the price at 12 and 15
respectively, and leave it at that. The low price will certainly gain
ATT new DSL customers into it's fold, and more importantly,
keep them there. And it's not like ATT can't operationally justify
offering a lower price, the infrastructure for providing DSL has
long been in place, and the potential addition of subscribers will
make an already profitable service even more profitable.

But no. God forbid ATT will put anything resembling an honest
competitive deal that's a clear winner for all on the table.
Instead, the consumer, lured by the seemingly low price, will
almost certainly find out the hard way that there are strings
attached, that there are "gotchas" buried in the fine print that
effectively erase whatever low cost and savings ATT had at first
dangled in front of their nose.

ATT is betting that once it has ensnared unsuspecting DSL
consumers into their fold they will feel locked in and too lazy to
abandon the status quo and seek out better (and more honest)
alternatives from other DSL providers. Don't bet on it. It may not
be written in big bold letters in Business 101, but the last thing
you want to do is deliberately ****-off your customers. ATT may
not have the time to look at that particular, broader
consequence in the face of greedy, short term profiteering, but
maybe ATT's future churn and customer retention rate may
prove to be much needed guidance in that regard.

Then again, the way some companies work these days, maybe
not.
Posted by Terry Murphy (82 comments )
Reply Link Flag
Price Switch...
This is a very old strategy to gain and keep new customers. You switch the prices later so that you can make a good profit. Heck, even car dealers use it by showing you one real cheap (no options) car with a "low low sticker price" then immediately take you to the cars with standard options and MSRP prices.
Posted by zaznet (1138 comments )
Link Flag
Verizon can't provide what they offer
Working for a private ISP, I can confirm that Verizon has created such a hype for their DSL services that they can't keep up with the demand. At this time their delay is a month or more, and many customers are rejected due to "No service available". Even when lines are already "activated", it's on paper only, with another week or so of no-rout issues before actual service is set up.
Posted by asher_nm (1 comment )
Reply Link Flag
It's not the AT&T you knew....
.. this is just SBC with facade. All the old SBC problems remain.
Management hasn't improved. Performance has not improved. But
the Marketing people are having a ball - they are the only brains
left in the company - and they probably aren't SBC/ATT employees.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Broadband
I read with interest the article on Broadband. I have also read several others too.

Here in England, I get 16mbps for $19.00/mo The price of the broadband here is very structured and consistent.

I was surprised to find that our broadband was quite a lot cheaper than broadband in the US.

I hope you guys can get this sort of service soon
Posted by flattley (1 comment )
Reply Link Flag
 

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