DSL strikes a chord with frugal shoppers

A new kind of digital divide is emerging in the U.S. broadband market.

On one side are middle-income and price-sensitive households, which tend to favor DSL service offered by phone companies. On the other are more affluent families, which gravitate toward higher-speed cable modem services.

According to a recent report published by Leichtman Research Group, about 21 percent of households earning an annual income of between $30,000 and $75,000 a year subscribe to DSL. About 18 percent of these households subscribe to cable. By contrast, 37 percent of all households with annual household incomes over $75,000 subscribe to cable broadband and 27 percent subscribe to DSL.

"Clearly price is much more important at this point in the game," said Bruce Leichtman, president and principal analyst for Leichtman Research Group. "Middle-income families making the jump from dial-up to broadband are much more price-sensitive, and clearly the phone companies' messaging on low-priced DSL has gotten through loud and clear."

A year-and-a-half ago, pricing of DSL and cable modem service was roughly the same. But over the past year, the phone companies have launched an aggressive assault by dropping prices. At the end of 2005, the average price of DSL service was about $32 per month, roughly $9 less than cable, according to research firm IDC.

AT&T has twice lowered the price of its DSL service and now offers its 1.5Mbps service for $12.99 for the first year. Since AT&T's prices are promotional, after the first year, the price of the service jumps to the company's regular pricing model, which is $29.99 per month. Verizon created a new tier of service, which includes 768Kbps downloads, for $14.95 per month.

Price pressure
Regardless of household income, the promise of lower prices has also convinced some cable subscribers to switch to DSL. Dan Spencer, 38, of Norristown, Pa., had been a Comcast broadband subscriber for over three years. But after he realized his family was paying over $100 per month for high-speed Internet access and TV service, he decided to abandon Comcast for EchoStar's satellite TV and Verizon's DSL service.

"My wife usually pays our bills," he said. "But one day, when I saw how much we were paying Comcast for our cable TV and broadband, I was shocked. It was outrageous."

Spencer said he now pays about $75 per month for TV and Internet access, and he estimates he is saving roughly $45 per month over what he was paying for the Comcast service.

The low cost of DSL has kick-started DSL subscription rates, helping DSL providers increase their total customer base by 39 percent in 2005, according to Forrester Research. Verizon alone signed up 613,000 new high-speed Internet subscribers in the fourth quarter of 2005, a record for the company. It continued the strong growth in 2006, having signed up 541,000 new subscribers in the first quarter.

But the phone companies' success hasn't meant the demise of cable, which in total saw broadband subscriptions grow 21 percent in 2005. In fact, cable companies have also set new records in recent quarters for the number of subscribers they've acquired.

[umbrae]

Its more than price...

I have several co-workers and friends with Cable internet, and they are always going down. Their speed spikes and drops, and sometime it just doesn't work. I have DSL from a former company where I worked and helped develop the deployment strategy for DSL. I have had it since 2000, being one of a handful of beta tester, and have only had the service go down on my 3 times. And each time its was the Ma-Bell and not my ISP.

Note: this does not include hurricanes where EVERYTHING is down. Who cares about Internet when there is no power. :)

[jsmith1785]

More than price

Here in NE Ohio, the cable service is great, doesn't go down for us. The speed is always around 4.5 - 4.8 Mbps.

I don't really care about the DSL prices, I can't stand local phone companies, doesn't matter who they are. Sprint/Embarq is local here, but whether them, SBC/AT&T, Verizon, they all screw people over on their phone prices. Plus, I regularly download large files, iso images of linux distros & such. DSL speeds top at 3Mbps, compared to standard cable at 5Mbps.

On top of that, DSL services demand a 1-2 year contract, no thanks, they can shove their contracts. I'll stick to Earthlink cable via Time Warner with the basic $14.95 Vonage plan in case I need something other than my cell phone.

For my needs, DSL can't compare.

[drfrost]

My cable is solid

I have a cable modem and the service is solid. The DSL and Cable networks are inherently different, and if the company in question doesn't address some of the issues with cable then you can certainly see some of the issues you are talking about (slows way down when everyone on your block is using it) but I have to say I've had very good luck with my cable modem service. It's gone down three times in the last year. Once was due to a hardware failure (a construction crew demolished their main line, a huge fiber optic cable... there was an article the next day in the newspaper about it) and it was down ~24 hours. The other two were due to electrical storms (I'm guessing because I live a few blocks from the main servers and both of the other outages were during big lightning storms) and lasted about 4 to 6 hours. Still, a few hours downtime once every 4 months is not bad in my experience.

[steveb7]

It really is more than just price

Here in AZ it's Qwest for DSL and Cox/Comcast for cable. The cable companies want to charge business level pricing, $125/month, if you VPN back to work. According to them that's not residential usage as defined by them. In addition they block various ports. DSL on the other hand has no restrictions. I can run a VPN, SMTP or web server and not be charged extra. In addition when the local university is in session my neighbor gets about 128Kb downstream from Cox cable due to the network design they have implemented, yet my DSL is unaffected.

[Akiba]

DSL has better upstream

If you want a connection that actually works well both ways then DSL is the way to go. It really out does cable when it comes to uploads. If you download a lot of torrents, ftp files to web servers or use a lot of upstream bandwidth then this is really important. Another problem with cable for bandwidth intensive users is it has unspecified bandwidth caps while decent DSL tends to be unlimited. If your into testing out web services or seeding torrents then cable is pretty useless.

But either way, most Americans are getting ripped off when it comes to broadband serverices when family households in Japan are getting 10 to 100Mbit FIOS service for $25 to $50 per month.

[umbrae]

Its more than price...

I have several co-workers and friends with Cable internet, and they are always going down. Their speed spikes and drops, and sometime it just doesn't work. I have DSL from a former company where I worked and helped develop the deployment strategy for DSL. I have had it since 2000, being one of a handful of beta tester, and have only had the service go down on my 3 times. And each time its was the Ma-Bell and not my ISP.

Note: this does not include hurricanes where EVERYTHING is down. Who cares about Internet when there is no power. :)

[jsmith1785]

More than price

Here in NE Ohio, the cable service is great, doesn't go down for us. The speed is always around 4.5 - 4.8 Mbps.

I don't really care about the DSL prices, I can't stand local phone companies, doesn't matter who they are. Sprint/Embarq is local here, but whether them, SBC/AT&T, Verizon, they all screw people over on their phone prices. Plus, I regularly download large files, iso images of linux distros & such. DSL speeds top at 3Mbps, compared to standard cable at 5Mbps.

On top of that, DSL services demand a 1-2 year contract, no thanks, they can shove their contracts. I'll stick to Earthlink cable via Time Warner with the basic $14.95 Vonage plan in case I need something other than my cell phone.

For my needs, DSL can't compare.

[drfrost]

My cable is solid

I have a cable modem and the service is solid. The DSL and Cable networks are inherently different, and if the company in question doesn't address some of the issues with cable then you can certainly see some of the issues you are talking about (slows way down when everyone on your block is using it) but I have to say I've had very good luck with my cable modem service. It's gone down three times in the last year. Once was due to a hardware failure (a construction crew demolished their main line, a huge fiber optic cable... there was an article the next day in the newspaper about it) and it was down ~24 hours. The other two were due to electrical storms (I'm guessing because I live a few blocks from the main servers and both of the other outages were during big lightning storms) and lasted about 4 to 6 hours. Still, a few hours downtime once every 4 months is not bad in my experience.

[steveb7]

It really is more than just price

Here in AZ it's Qwest for DSL and Cox/Comcast for cable. The cable companies want to charge business level pricing, $125/month, if you VPN back to work. According to them that's not residential usage as defined by them. In addition they block various ports. DSL on the other hand has no restrictions. I can run a VPN, SMTP or web server and not be charged extra. In addition when the local university is in session my neighbor gets about 128Kb downstream from Cox cable due to the network design they have implemented, yet my DSL is unaffected.

[Akiba]

DSL has better upstream

If you want a connection that actually works well both ways then DSL is the way to go. It really out does cable when it comes to uploads. If you download a lot of torrents, ftp files to web servers or use a lot of upstream bandwidth then this is really important. Another problem with cable for bandwidth intensive users is it has unspecified bandwidth caps while decent DSL tends to be unlimited. If your into testing out web services or seeding torrents then cable is pretty useless.

But either way, most Americans are getting ripped off when it comes to broadband serverices when family households in Japan are getting 10 to 100Mbit FIOS service for $25 to $50 per month.

[ordaj]

When are wireless & power line broadband coming online?

That should get prices down.

[schubb]

Testing

Both of those are still in testing phases in the US. You have spectrum allocation issues with Wireless that need worked out.

As for BoP, there is an issue with Ham Radio that needs to be addressed. The issue has presented that there needs to be more research done into what frequencies are being affected. Ham Radio still has a large place in disaster situations.

There are numerous reports of Ham Radio "buzzing" in the test locations for BoP, this brings up worries that it may interfer with emergency response communication systems.

Hopefully they can get both of these worked out quickly so we can have real competition.

[200mbpsBPL]

Current Communications Broadband BPL in Manassas going for 10 mbps upload

Check their website:

http://www.current.net/WatchTheVideo/

Read more about Global Broadband over PowerLines updates especially about ham-friendly BPL technology !!!
http://broadbandoverpowerlines.blogspot.com/

[Jackson Cracker]

wireless is already here,

in some areas at least, with more on the way, but
in many cases it's not very "broad".
Powerline broadband still sounds like pie in the sky
due to all the technical problems.

[ordaj]

When are wireless & power line broadband coming online?

That should get prices down.

[schubb]

Testing

Both of those are still in testing phases in the US. You have spectrum allocation issues with Wireless that need worked out.

As for BoP, there is an issue with Ham Radio that needs to be addressed. The issue has presented that there needs to be more research done into what frequencies are being affected. Ham Radio still has a large place in disaster situations.

There are numerous reports of Ham Radio "buzzing" in the test locations for BoP, this brings up worries that it may interfer with emergency response communication systems.

Hopefully they can get both of these worked out quickly so we can have real competition.

[200mbpsBPL]

Current Communications Broadband BPL in Manassas going for 10 mbps upload

Check their website:

http://www.current.net/WatchTheVideo/

Read more about Global Broadband over PowerLines updates especially about ham-friendly BPL technology !!!
http://broadbandoverpowerlines.blogspot.com/

[Jackson Cracker]

wireless is already here,

in some areas at least, with more on the way, but
in many cases it's not very "broad".
Powerline broadband still sounds like pie in the sky
due to all the technical problems.

[BengalTigger]

neither thank you

How'd you like that comcast "we are consumer friendly" response! She's touting that $99 package like its a value just below the article where the guy talks about cutting his costs from $100 to $60. I love it!

Cable can keep their fast connections. I refuse to fill their pockets with my hard earned cash just so they can "open the spiggot" a little more for us thirsty people. The way I look at it, they should be paying me to connect. Let them collect from the companies that are benefitting financially from internet sales (etc).

[drfrost]

They provide a service

If it's not worth the money they charge for it then don't get it (which is what you are basically saying). It's worth the money to the me. I spend a lot of time online and I need a lot of bandwidth with low latency. Well worth the money in my opinion.

[BengalTigger]

neither thank you

How'd you like that comcast "we are consumer friendly" response! She's touting that $99 package like its a value just below the article where the guy talks about cutting his costs from $100 to $60. I love it!

Cable can keep their fast connections. I refuse to fill their pockets with my hard earned cash just so they can "open the spiggot" a little more for us thirsty people. The way I look at it, they should be paying me to connect. Let them collect from the companies that are benefitting financially from internet sales (etc).

[drfrost]

They provide a service

If it's not worth the money they charge for it then don't get it (which is what you are basically saying). It's worth the money to the me. I spend a lot of time online and I need a lot of bandwidth with low latency. Well worth the money in my opinion.

[open-mind]

Switched from Cable to DSL...

Because my monthly cost dropped from $45 to $15 (for the first year anyway).

Supposedly the cable was faster, but in day-to-day use I can't really tell much difference.

[open-mind]

Switched from Cable to DSL...

Because my monthly cost dropped from $45 to $15 (for the first year anyway).

Supposedly the cable was faster, but in day-to-day use I can't really tell much difference.

[Johnny Mnemonic]

There is competition amongst cable companies

There is also wow cable here:

www.wowway.com

I am sick of Comcast's high prices and network
outages. Their DNS servers seem to go out also
on a regular basis. They seem to be pricing
themselves out of the market.

[Jackson Cracker]

sounds good

Too bad WOW! is only available in three states.

[Johnny Mnemonic]

There is competition amongst cable companies

There is also wow cable here:

www.wowway.com

I am sick of Comcast's high prices and network
outages. Their DNS servers seem to go out also
on a regular basis. They seem to be pricing
themselves out of the market.

[Jackson Cracker]

sounds good

Too bad WOW! is only available in three states.

[saleen351]

Naked DSL vs DSL

Every time I tried to buy DSL they tried to force me into buying a phone line, my unlimited cell plan at $55 is all the phone I need. Cnet please do an article on naked DSL!! Until then it's 60 bucks to comcast. It still might be cheaper for the 1st year to get the DSL but after the year, It's not, it's the same price a distincition the artilce doesn't make.

[saleen351]

Naked DSL vs DSL

Every time I tried to buy DSL they tried to force me into buying a phone line, my unlimited cell plan at $55 is all the phone I need. Cnet please do an article on naked DSL!! Until then it's 60 bucks to comcast. It still might be cheaper for the 1st year to get the DSL but after the year, It's not, it's the same price a distincition the artilce doesn't make.

[thenet411]

Cable still has one fundamental problem

That problem is that it is now, and always will be, a shared medium. That is a major drawback. Network administrators (when they have a choice between DSL and cable) will always go with DSL. It is no fun when you are called at 8:00pm to remote into a data center only to have your available neighborhood bandwidth hogged by the kid next door downloading porn. This does not happen with DSL.

It used to be that DSL speeds were far slower than cable but that is changing. At the moment, DSL speeds (for the majority of possible DSL connections offered) are about equal. Some cable markets are rolling out 20+Mb/s service and some are even higher. But the same problem will always come back and that is the shared medium. All that bandwidth means nothing when the cable comany oversells the area or little Johnny next door decides to upload 10GB of videos of him playing his XBox.

If you really want reliable broadband service that is not affected by your next door neighbor's surfing habits, go with DSL.

[metro305]

Central Office connections can also result in the same "shared medium" prob

True but don't forget that your DSL circuit ends up a DSLAM at a CO. At the CO your DSLAM must interface with your ISP's FR or ATM network and that is a weak link. I have had instances where too many circuits were homed in to a CO but the interface to the ATM data network was a T-1!!! Talk about shared and over subscription.

I still favor DSL but must be naked (no dialtone)for me to make the move back from cable.

FYI I worked for an independt ISP that provided DSL in the late 90's - early 00's and used your argument to get people to switch :)

-Metro305

[tanis143]

Urban Myth

Um, sorry to say but thats an old stratagy and now an urban myth (unless your cable company is living in the dark ages). Now, most cable companies use node management and QOS to make sure that the average bandwidth stays the same. I live in a middle class neighborhood where I know there are plenty of people on the cable network (my computer that has an extended wireless antenna picks up about 8 wireless connections besides mine, and the ones I logged into are on cable) and my speed stays around 8.5 MBps (9MBps service for 54.95). My uploads are always around 900 KBps.

DSL speeds however are always varried depending on where you live. Sure, they only offer you what they can give on approxamation, but if you can only get 1 MBps vs 4 MBps(the standard package for 39.99), which would you take? Besides, with the cable company offering phone, HSI, and tv service, its much easier to take a bundle than get the services from 2 different companies. Why else do you think DSL has dropped its price so much in the past few years. They had to find some way to compete with the cable companies.

[goomah]

Not true

I work at a large well known company datacenter, at home the majority of us use cable - NOT DSL - even our network admins. It's more reliable. As far as the other comment about a shared medium, DSL is also. PPOE SUCKS. You get point to point so far then it's shared also. The farther away you get from the switch your bandwith suffers, so unless you're right next door to it you lose bandwidth. With DSL you're using 80 year old (could be older or newer lines - still old lines) copper lines, most cable lines have been upgraded in the past 10 yrs or so. I've worked in the IT field since 1988, I will never have DSL (unless it's my only option). BTW: I want FIOS! lol

[thenet411]

Cable still has one fundamental problem

That problem is that it is now, and always will be, a shared medium. That is a major drawback. Network administrators (when they have a choice between DSL and cable) will always go with DSL. It is no fun when you are called at 8:00pm to remote into a data center only to have your available neighborhood bandwidth hogged by the kid next door downloading porn. This does not happen with DSL.

It used to be that DSL speeds were far slower than cable but that is changing. At the moment, DSL speeds (for the majority of possible DSL connections offered) are about equal. Some cable markets are rolling out 20+Mb/s service and some are even higher. But the same problem will always come back and that is the shared medium. All that bandwidth means nothing when the cable comany oversells the area or little Johnny next door decides to upload 10GB of videos of him playing his XBox.

If you really want reliable broadband service that is not affected by your next door neighbor's surfing habits, go with DSL.

[metro305]

Central Office connections can also result in the same "shared medium" prob

True but don't forget that your DSL circuit ends up a DSLAM at a CO. At the CO your DSLAM must interface with your ISP's FR or ATM network and that is a weak link. I have had instances where too many circuits were homed in to a CO but the interface to the ATM data network was a T-1!!! Talk about shared and over subscription.

I still favor DSL but must be naked (no dialtone)for me to make the move back from cable.

FYI I worked for an independt ISP that provided DSL in the late 90's - early 00's and used your argument to get people to switch :)

-Metro305

[tanis143]

Urban Myth

Um, sorry to say but thats an old stratagy and now an urban myth (unless your cable company is living in the dark ages). Now, most cable companies use node management and QOS to make sure that the average bandwidth stays the same. I live in a middle class neighborhood where I know there are plenty of people on the cable network (my computer that has an extended wireless antenna picks up about 8 wireless connections besides mine, and the ones I logged into are on cable) and my speed stays around 8.5 MBps (9MBps service for 54.95). My uploads are always around 900 KBps.

DSL speeds however are always varried depending on where you live. Sure, they only offer you what they can give on approxamation, but if you can only get 1 MBps vs 4 MBps(the standard package for 39.99), which would you take? Besides, with the cable company offering phone, HSI, and tv service, its much easier to take a bundle than get the services from 2 different companies. Why else do you think DSL has dropped its price so much in the past few years. They had to find some way to compete with the cable companies.

[goomah]

Not true

I work at a large well known company datacenter, at home the majority of us use cable - NOT DSL - even our network admins. It's more reliable. As far as the other comment about a shared medium, DSL is also. PPOE SUCKS. You get point to point so far then it's shared also. The farther away you get from the switch your bandwith suffers, so unless you're right next door to it you lose bandwidth. With DSL you're using 80 year old (could be older or newer lines - still old lines) copper lines, most cable lines have been upgraded in the past 10 yrs or so. I've worked in the IT field since 1988, I will never have DSL (unless it's my only option). BTW: I want FIOS! lol

[heritagejd]

DSL Vs. Cable

Both PONS and DSL are shared platforms.

Question, is their any demand for dedicated scaled bandwidth from 10 to 300 mbs, based on an individuals need, simultaneous in both directions?

All comments welcome!

[heritagejd]

DSL Vs. Cable

Both PONS and DSL are shared platforms.

Question, is their any demand for dedicated scaled bandwidth from 10 to 300 mbs, based on an individuals need, simultaneous in both directions?

All comments welcome!

Switched from DSL to Cable

I dialed in to DSL, got busy signal, cancelled and has been with cable internet ever since.

[bob blob]

uh...

you don't "dial in" to DSL. perhaps you had dial-up service...not DSL.

Switched from DSL to Cable

I dialed in to DSL, got busy signal, cancelled and has been with cable internet ever since.

[bob blob]

uh...

you don't "dial in" to DSL. perhaps you had dial-up service...not DSL.

[dragonbite]

Availability

Heck, I just want something to be available to me! It's like they've gotten so into this one-up-man-ship that they've forgotten that there are people NOT in West-Bum-F%&$ who want ANY broadband service!

I'm in the Norhteast and DSL in the next town over (literally a couple hundred feet away) but not for me?!

[dragonbite]

Availability

Heck, I just want something to be available to me! It's like they've gotten so into this one-up-man-ship that they've forgotten that there are people NOT in West-Bum-F%&$ who want ANY broadband service!

I'm in the Norhteast and DSL in the next town over (literally a couple hundred feet away) but not for me?!