July 20, 2005 4:00 AM PDT

Broadband's bargain hunt

After five years as a cable modem subscriber, Sushim Mandal is considering switching his broadband connection to a new Verizon Communications service called Fios, which extends a high-speed fiber network directly to consumers' homes.

Mandal, an engineer at Intel, said he's tired of paying a $50 monthly subscription for his cable modem service when on most days he gets only about half the bandwidth for which he is paying. Since cable networks share capacity, heavy usage can diminish overall network performance and cut into the bandwidth of customers like Mandal.

So Mandal, who lives in a suburb of Portland, Ore., plans to switch to the new Fios service, which is under construction in his neighborhood. With download speeds as fast as 30 megabits per second, Fios will provide enough bandwidth for broadband, telephone service and television.

Mandal isn't the only cable broadband customer looking at alternatives. While the vast majority of cable broadband customers say they are satisfied with their current service, they also say they'd be willing to go through the hassle of switching services if they could find a better deal.

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What's new:
While cable broadband customers say they are satisfied with their service, they also say they'd be willing to switch services if they could find a better deal.

Bottom line:
Consumers are reaping the benefits of a growing discount war among phone and cable companies.

More stories on broadband

There are plenty of bargains to be had. Last month, SBC Communications announced a promotional offer that allows customers to get one year of digital subscriber line service (DSL) for $14.95 per month. And earlier this year, Verizon increased speeds and kept its price of $29.95.

"Cable prices are too high when you look at what you're getting in terms of megabits per dollar," Mandal said.

For their part, cable operators say they don't generally plan to lower prices. Instead, they will continue to focus on improving speeds and expanding content. "Our research indicates that customers are looking for speed first and cost second," said Jeanne Russo, a spokeswoman for Comcast. Russo said that Mandal's situation is unfortunate but that it's not the typical experience of Comcast's customers.

"We want every customer's experience to be a great one," she said. "And for the most part it is. Over 90 percent of our customers say they would recommend our service to a friend or family member."

So far, the phone companies' pricing strategy has helped them gain some market share against their cable competitors. In 2004, DSL had about a 41 percent share of the broadband consumer market, up two percentage points from the year before, due largely to aggressive pricing. Experts expect the trend to continue, and within three to four years subscribers will be evenly split between cable and DSL.

"Other things like speed and customer support are factors, but price will continue to be the big driver in selecting service in the near term," said Jim Penhune, an analyst with Strategy Analytics.

For some, the promotions and price cuts offered by the phone companies are just too good to pass up. Steve Peltz, a systems programmer who lives in Champagne, Ill., says he is perfectly happy with his cable modem service from Insight Communications, a Midwestern provider. Aside from a minor billing snafu when he started the service about a year ago, he said he doesn't have any complaints. But he is still considering switching to SBC's DSL service.

"SBC is at the level where I seriously am considering switching service," he said. "I'm paying about three times (SBC's price) for my cable service for a little bit more speed. So it's something I really have to think about."

Price versus speed
According to a study published by J.D. Power and Associates last September, the biggest gap in customer satisfaction between cable and DSL was based on price. On average, DSL service ranges from $20 to $30 a month before discounts. Prices on cable broadband typically start around $30 to $40 a month and can go as high as $65 a month.

"Our research shows us that customers are looking for overall value," said Bobbi Henson, a spokeswoman for Verizon. "Our focus is on providing a combination of good prices, good speed and excellent content."

Phone companies are also reaching more prospective customers. In 2004, an estimated 56.6 percent of U.S. households had access to both cable and DSL service, according to Jupiter Research. By 2009, dual access should jump to 76 percent.

For the most part, cable operators are fighting back with speed. Comcast raised the download speed of its service again last week to 6 megabits per second for its basic plan and 8mbps for its premium service. Earlier this year, Time Warner raised its download speeds to 5mbps and 8mbps. And cable operators Cox Communications and Adelphia have added a new supercharged tier of service, with download speeds of 16mbps and 15mbps respectively, to compete with Verizon's Fios service. By comparison, an average DSL service provides about 3mbps.

Cable companies also are trying to hold onto customers by bundling high-speed Internet access with television and phone service.

Comcast, for example, plans to offer special features to subscribers of both its broadband and cable television services--perks such as remote recording capability through its Comcast.net portal to allow customers to record television shows on its digital video recorder. The company also plans to integrate caller ID functions with its television service so customers can see on their TVs when someone is calling them.

Phone companies are responding with their own bundled services. Verizon's Fios network will deliver telephony, high-speed Internet and TV service at rates far faster than DSL or even most cable services. SBC and BellSouth are also upgrading their networks by putting fiber closer to customers while adding TV service.

The question, of course, is how long these discounts can last.

"The broadband market is going through the same thing the dial-up market went through about 10 years ago," Penhune said. "Some providers are cutting prices drastically, just like AOL did, to get people on their networks. It will be interesting to see if people stay with the service beyond the promotional period."

32 comments

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I thought cable providers were better, I was wrong.
For their part, cable operators say they don't generally plan to lower prices. Instead, they will continue to focus on improving speeds and expanding content. "Our research indicates that customers are looking for speed first and cost second," said Jeanne Russo, a spokeswoman for Comcast.

1. "expanding content" exactly who are they fooling with this? internet content is 98% available to every service provider and their subscribers. "Expanding content" is a smoke screen to validate their "research".

2. Speed first, price second.....i doubt it. Speed is great, but when the competitor offers comparable speeds at half the price you should soon follow suit. The cost of switching is not that high. In fact, aside from making a phone call to do so or being under a contract, it is practically $ZERO. As consumers we should demand more from these typical one-sided contracts that bind us to a certain time frame. If they want to lock us down, we should demand a Service Level Agreement. This goes for phone, cellular, tv AND internet services.

3. Phone companies AND cable companies will be crapping their drawers when WiMax begins to roll out.
Posted by jamie.p.walsh (288 comments )
Reply Link Flag
Price Price Price
I currently have Adelphia, soon to be Time Warner, and pay about $45 per month for up to 6 MBs download speed. What I would really like to have is 3 MBs for about $23 per month. Why can't these guys provide different levels of service? I don't need or use 6MBs consistently, so I would much rather pay a lower price.

Insight is offering cable internet for $30/month guaranteed for a year in two markets on either side of me, but I am stuck paying $45 per month.

Come on Adelphia, get with it!
Posted by (2 comments )
Reply Link Flag
what speed is that DSL?
"Last month, SBC Communications announced a promotional offer that allows customers to get one year of digital subscriber line service (DSL) for $14.95 per month."

WHAT SPEED DSL?

Bellsouth offers a "slow" DSL at 256K for their bottom tier. Better than dial-up but not truly broadband as we think of it.

I wish the reporters would ask more questions. they are raving about this "one year" SBC offer but they don't say what the speed is. If it's common 1.5 mbps, WOW. If it's the paltry 256K like Bellsouth offers beginners, well it's better than dial-up but don't act like it's the moon, you know?
Posted by ChazzMatt (169 comments )
Reply Link Flag
by the way...
A few months ago, I dumped the Bellsouth $40's 1.5 mpbs (really 1.0 - 1.2 mbps on good days, sometimes 700k), and got Comcast's 4.0 mpbs cable modem. Actualy I consistently test at 4.1 mbps -- for the same price I was paying for NEVER 1.5 mbps DSL.

And Comcast jsut announced they are boosting that 4.0 to 6.0 by the end of summer.

Cable rocks.
Posted by ChazzMatt (169 comments )
Link Flag
sbc dsl prices
Express - 384Kbps -1.5Mbps down 128Kbps-384Kbps up $14.95/mo

Pro - 1.5Mbps - 3.0Mbps down 384Kbps-512Kbps up $24.99

is what they're offering

I have the Pro and I get 3.0mbps consistantly, with a 512k upload, well worth the extra dollars!
Posted by hugh dunnit (35 comments )
Link Flag
The bottom tier is the cheap seats...
... for more money, and not too much more money, you can get 3
mbps DSL, with 6 mbps DSL coming this fall. And if FTTH ever gets
installed, you can have gigabit DSL.
Posted by Earl Benser (4310 comments )
Link Flag
Verizon FiOS versus Comcast
As I write this, the men from Verizon are stringing fiber from the pole to my house and connecting it to the optical network terminal. The terminal supports up to four phone lines, as well as providing 10/100 ethernet and -- get this, Comcast -- a co-ax video connector.

Now, as one who is not beholden to my ISP for an email address, and who is not the slightest bit interested in "walled garden" content, why would I not opt for the service which is more than $10 a month cheaper?

Cable companies may indeed tout their speeds, but 5 Mpbs downstream/2 Mbps upstream at $35 a month for fiber is certainly competitive, and let's not forget that cable bandwidth is shared.
Posted by rwelbourn (2 comments )
Reply Link Flag
verizon fios has problems
although the verizon fios service seems good, the tech support
from Verizon is totally nonexistent. They don't even have tech
suport number in the Baltimore area. Although comcast isn't as
good a technology, at least they treat customers with some respect.
Verizon treats you like an idiot on the phone, and they have on line
FAQs that are useless. Stay away from Verizon if you think you'll
ever need any tech support. They are quick to sell, but not quick to
help!!!!!
Posted by wmitz (1 comment )
Link Flag
Cable company arrogance
It is just so typical of Cable companies that they use their government-granted monopoly to keep competitors from offering more and better services for less money. Cable has always been able to offer much higher broadband speeds (so has DSL), they just didn't want to and didn't need to since conmpetition was restricted. Now that DSL is pressing the speed and service issues, cable is starting to respond, but typically, not by reducing prices, but adding speeds to their services, the capability for which was already there! Cable customers have been screwed for years, and it will continue until the FCC forces competitive access.
It's like your boss telling you to take next week off with pay, when you already were scheduled for your paid vacation. Duh! Big favor, huh?It's like offering free sweat in the summertime.
There are plenty of other ezxamples of giving customers something they already had and making it sound like they did you a favor.
The only favor I want is more choices through competitive access to the delivery infrastructure. It would take less than a week for a company to offer a packaged service of a la carte cable channel choices, Very High Speed -15-30 (or more!)MBPS for Broadband, Home security, VOIP, House Management, tons of stuff. And for less than charged now because of cable's monopoly. If you believe the FCC's cliam of only wanting to foster competition through restricting access, then I've got a bridge in New York and some land in Florida I want to sell you!
Posted by bdennis410 (175 comments )
Reply Link Flag
So now Verizon is a hero??
Love reading the critics take on how cable companies monopolize or overcharge for services and NOW Verizon is a HERO because they've launched FIOS. Does anyone remember when DSL was all there was and the phone companies charged $100 - $200 a month for lousy service? DSL is distance sensitive, actual speeds can vary greatly but they don't prorate your bill if you live further from the CO than the guy a half mile away. DSL is only dedicated from your house to the local switch. So what's that& a mile or two? Then youre out over the www like everyone else. I talk to a lot of people paying $60 a month for DSL or ASDSL for speeds of 256K. The phone companies charges new subs half that. Do they call old customer and say, "hey, were going to lower your bill because you've been overpaying"? Phone companies have held customers hostage for 100 years. Cable companies built a franchise, town by town, to offer service that people wanted, have been pioneers in services like digital phone, HDTV, DVRs, on demand, High speed modems, etc. The cost of programming from ESPN, Disney and other popular channels go up every year just like gas, electricity, water, PHONE BILLS,etc. The costs are passed on to consumers as in any business. But, no one remembers when cable companies spent millions to build out infrastructure and people could not wait no one could wait to get cable on the street because the only alternative was an antenna on your roof. Yes its expensive for good service. Just ask the phone company when you need a service call.
Posted by polarten (4 comments )
Link Flag
Cable company arrogance
It is just so typical of Cable companies that they use their government-granted monopoly to keep competitors from offering more and better services for less money. Cable has always been able to offer much higher broadband speeds (so has DSL), they just didn't want to and didn't need to since competition was restricted. Now that DSL is pressing the speed and service issues, cable is starting to respond, but typically, not by reducing prices, but adding speeds to their services, the capability for which was already there! Cable customers have been screwed for years, and it will continue until the FCC forces competitive access.
It's like your boss telling you to take next week off with pay, when you already were scheduled for your paid vacation. Duh! Big favor, huh?
It's like offering free sweat in the summertime.
There are plenty of other examples of giving customers something they already had and making it sound like they did you a favor.
The only favor I want is more choices through competitive access to the delivery infrastructure. It would take less than a week for a company to offer a packaged service of a la carte cable channel choices, Very High Speed -15-30 (or more!)MBPS for Broadband, Home security, VOIP, House Management, tons of stuff. And for less than charged now because of cable's monopoly. If you believe the FCC's cliam of only wanting to foster competition through restricting access, then I've got a bridge in New York and some land in Florida I want to sell you!
Posted by bdennis410 (175 comments )
Reply Link Flag
ISP switch causes HUGE increase in SPAM
I recently took advantage of the cheap SBC DSL offer and much to my surprise, I now receive more than 400 SPAMs per day.

Even though SBC has a spam filter, I still have to look thru the bulk folder as it also filters some of my good email into the junk box. Kind of ruins the idea of having the filter, IMHO

The prior ISP, (earthlink), must have filtered out a huge amt of crap before it reached subscribers.
Posted by jblair1 (3 comments )
Reply Link Flag
Broadband and IPTV
Recently I heard that IP was for PC viewing...... So this seems like a way for Microsoft to gain a foothold in the home enterainment market with it''s Windows Media player PC devices. Now Microsoft has a direct inroad into home
enertainment. Now IPTV becomes the default choice for those who choose to use it. Microsoft has talked about X-box becoming the home entertainment device. With their DRM technology this gives MS the
ability to control and charge for what content is delivered. I believe Microsoft will use it's money to seed the market. On the otherhand IPTV creates more competition for Cable and Satellite.....
This raises some interesting questions:
1. Will IPTV be able to be viewed in other formats such as HDTV.
2.Will there be a device to
convert IPTV signals to other formats.
3.Can IPTV be be viewed with
Realplayer.....??
Posted by rshimizu12 (98 comments )
Reply Link Flag
The blind leading the blind
Am I the only person that realizes that you can only download as fast as whatever server you are downloading from can upload?

Anyone with a true understanding of networking knows that a download consists of an exchange of information between two computers, and the weakest link is the computer with the slowest upload speed.

I use a cable modem with an "advertised" speed of 5Mbps, but the only way to take advantage of the full bandwidth is to have FIFTEEN (15) torrents downloading at once, at better than 150Kbps, and I would still be able to surf the web with no slow downs.

This marketing BS is sucking in millions of dollars every month. I can't be the only person intelligent enough to see this. Am I?
Posted by dam7ri (67 comments )
Reply Link Flag
Your not alone...
I've said it on numerous other responses to articles touting how wonderful broadband is.

I'd be tickled to have symetrical 1.5Mb/s access for less than USD $200/month where the ISP/ASP would also route my ip address block.

I can get that now, but the starting price is about USD$500/month with a 3 year contract.

Of course, now that the cable companies don't have to share their bandwidth, it's just a matter of time before the telcos get the same treatment and I won't be able to get the service for that price.
Posted by (63 comments )
Link Flag
What about video on demand?
The cable company in our area has recently introduced video-on-demand services. Wouldn't this service require a very fast upload from the cable company servers and a very fast download at the customer side? It seems that this is where the faster download speeds would definitely be required.
Posted by Juster444 (33 comments )
Link Flag
Telco's and Cable Co's are wasting money.
I live on the same road as a high school, and within a 7 minute drive of another. Not only does Sprint not offer DSL to me, Time Warner hasn't laid cable down this way either. And neither plans to.

Instead of giving people who already have service double and sometimes triple speed increases (cable), and cutting to rock bottom prices (DSL), how about they stop killing each other over the same customers that already have a choice and start rolling out service to the millions and millions of people who have nothing at all.

Better yet, the FCC should be forcing them to, that's their job, isn't it?

The broadband age, broadband in every home, everyones connected...BS. I'm writing this with a modem, which is pretty much anything anyone has around here (including the school), and it ain't because it's not possible to service the area.

Sprint has run new lines down my road no less than 4 times in the 12+ years I've lived here, and within the last 5 they've laid FIBER from the nearest exchange to this remote building less than 1 1/2 miles from here.

Like Time Warner, they'd rather spend that money making sure people who already have service don't switch by giving them what, 6mbps instead of 3? Don't make me vomit in disgust. How about spending that cash on laying lines in places that need it, and don't have it.
Posted by (28 comments )
Reply Link Flag
That is a sad situation
But to build the revenue needed to run state-of-the-art technology to all homes, you need to start somewhere...seldom do companies have the monies needed to lay structure everywhere right off the bat, gotta serve the higher density of people who want/need the service to keep start-up costs low. When that is done, you will start to see all other places follow suit...look at the video game platform industry, there are those willing to pay $1000's of dollars for a system originally launched for $600 just because they can't wait, I can wait 3 years to get a better gaming system, I can wait 20 years for FiOS...If I couldn't, I'd steal the game system, and move to an area that offers it...you'll get it eventually, patience is the key.
Posted by gokoon (6 comments )
Link Flag
Prices are going to go up??
Well, it is good that their are at least 2 competitors in these fields. That will hopefully keep prices generally lower than usual. But you know once the new wears off it and they become entrenched in their respective areas that prices will go up again. Look at AOL and how their prices went up even after so many people are on broadband now. I can't imagine AOL keeping their prices that sky high for dial up for too much longer.
Posted by chilld1 (1 comment )
Reply Link Flag
comcast vs verizon
Verizon is coming to our town. So now with that prospect Comcast dumps the $16.00 dollar a month credit for buying all 3 services from them. They probably expect that people will split off their internet.We have seen considerable "creep" on our bill.My last one heads off this week for college so with them both gone there will be no complaining about download speed.Who cares anymore anyway? Downloads were ruined with viruses,threats of legal action, spam etc.I will probably go with a reasonable fee ,and middle of the road speed.I currently pay 45.95 for the internet. I think its too much plus my modem is probably capped. I get irritated when a google news story doesn't open with a "bang".
Mike
Posted by mikexeter (5 comments )
Reply Link Flag
Fios blows Comcast out of the water
I've had AOL dial-up, Earthlink, Verizon DSL, and Comcast Cable.

I have never been truly satisfied with either of them. Of course Comcast was the best in speed, but the worst in price.

Now with Fios, I'm paying $45 for 15 Mbs, which is superfast! Not to mention no shared lines!

I love it, downloads are ridicuosly fast! With Comcast, downloading anything would be around 80-300 Kbs range (sometimes 400, but not much higher).

With Fios, the lowest I get is 1000 Kbs!

Fios is the way to go!
Posted by shenwalee (1 comment )
Reply Link Flag
So why don't you get DSL
Sounds like your a DSL customer. Slower service for less money.
Posted by polarten (4 comments )
Reply Link Flag
So why don't you get DSL
Sounds like your a DSL customer. Slower service for less money.
Posted by polarten (4 comments )
Reply Link Flag
The price of quality
Content means that more and more of what you can get on a TV will be available on the providers internet. If its a smoke screen then why are cell phones increasing the offer of content like music, news and sports on their phones? Also, try watching your favorite TV show on your PC without a subscription to a provider. No one remembers when cable companies spent millions to build out infrastructure and people could not wait to get cable on the street because the only alternative was an antenna on your roof. ESPN, Disney and other popular content are as much to blame as they keep charging more to carry their programming. A cable, phone and internet package is about $3 - $4.00 per day. People waste that on lottery tickets and junk food

Why is Verizon launching FIOS? Because they want to get back some of the revenue cable companies have taken from them by offering cheaper phone service and they know that TV is the only place they can grow. The winner in the future will be the one with the most options, features, reliable service and the best content. I dont see WiMax (back to antennas on your roof) being that winner, just another option, at least not for a long time. Let's face it, costs to consumers keep going up and it's frustrating but you have choices.
Posted by polarten (4 comments )
Reply Link Flag
Who is selling out America?
I know that my provider does not out source at all, however Verizon does. Does this mean that all of the 'employees' that Verizon pays DONT pay anything to our tax structure?
Does this mean that Social Security is not being fed? Does this mean that Medicare and all of the taxes that US employees pay are not having to be paid by Verizon?
Thanks but no thanks, I am sticking with my provider that does keep my money in this country and this money also will go for the americans in our country and fill our tax system.
Yep, I am an American and proud to support my own country.
Posted by gr8ful-1 (1 comment )
Reply Link Flag
 

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