April 18, 2006 4:32 PM PDT

Verizon hikes DSL prices

Verizon Communications has jacked up the price of its lowest tier of DSL service by 20 percent, the company confirmed on Tuesday.

Starting Monday, the company said, it began charging $17.99 to new customers signing up for its 768kbps DSL service. Verizon had been charging $14.95 per month for the same speed service since August. The news of the price hike was first reported on the industry Web site Broadband Reports.

The price change applies only to new customers, said Bobbi Henson, a spokeswoman for the company. People who signed up for the $14.95 offer are guaranteed that rate for a year until their contract expires.

AT&T and Verizon rattled the broadband market last year, when they each introduced broadband service for less than $15 per month. In August, Verizon created a new tier of service for $14.95 per month that included download speeds of 768kbps and an upload speed of 128kbps.

Since Verizon floated the $14.95 offer, the company has quickly grabbed new broadband subscribers. Verizon reported that the fourth quarter of 2005 had been its best ever for broadband, with 613,000 new subscribers signing on, a 14 percent quarter-over-quarter increase.

But increased demand for DSL has had its problems. In some regions of the country, Verizon has been unable to meet the demand due to a shortage in equipment needed to add capacity to the network. Henson said the decision to increase the price of the 768kbps service had nothing to do with increased demand.

"This is a business decision that prices the service more in line with its value and that continues to provide customers with the choice of a broadband connection that's priced comparably to or better than most dial-up services," she said. "We expect this plan to continue to be highly attractive, especially to dial-up users and people on a budget who want the benefits of a high-speed connection."

While analysts agree that the Verizon service was undervalued at $14.95, they are unsure how consumers will react to a price hike after Verizon has spent so much time and effort marketing the service for $14.95.

"It's always easier to reduce prices than it is to increase them," said Joe Laszlo, an analyst with Jupiter Research. "Raising prices is tricky. Verizon needs to be careful that it doesn't train consumers to think of broadband as a commodity and encourage them to constantly look for better deals."

But some analysts say the price hike will likely have little impact on Verizon's DSL business, since even the $17.99 price tag is cheaper than services offered by cable operators, which typically range in price from $40 to $60 per month.

"I don't think this will hurt Verizon too much because for most people there isn?t a lower priced alternative," said Jeff Kagan, a telecommunications industry analyst. "Verizon offers a wide variety of pricing and speeds, which is very different from the cable companies, which offer faster speeds at higher prices."

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7 comments

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Only $6 cheaper than AOL dial up?
Who would get DSL for $18 when AOL dialup is only $6 more?

Does their DSL come with AOL's stellar browser?
Does it come with an @aol.com email address to woo your friends with?

Nope, I think people are going to start flocking to AOL dialup like never seen before.

//
Disclaimer for the _really_ challenged: Yes, I am kidding
<br clear="all" />
Posted by Dachi (797 comments )
Reply Link Flag
all my friends are on AOL
aren't yours?

non dialup is too fast for me. i can only read a webpage so fast while it is loading and stuff

even the p0rn is too quick, it is just the right speed on dial up
Posted by baswwe (299 comments )
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AT&T/SBC faster and cheaper
AT&#38;T/SBC Yahoo's basic DSL service is faster (1.5Mbps) and cheaper ($12.99/mo.). Good job Verizon, once again showing your inferiority to the competition.
Posted by Mike Maloney (7 comments )
Reply Link Flag
Competition?
Is Verizon even available in your area? How does your local cable company compare? They're the real pirates.

In any event, it's just an introductory offer. It's the long term rates that matter unless you want to keep changing your e-mail address.
Posted by freemarket--2008 (5058 comments )
Link Flag
Meh
While I pay 40 bucks for cable, I get 15/2. They could lower it to 5 bucks, I dont care. they could keep their 768k which is 19 times slower then what i get. Good Luck VZ in raising prices.
Posted by BlinkMM182 (63 comments )
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Who do I have to kill...
... to get DSL in my area. Without competition Comcast is charging an arm and a leg each month and I only have so many dumb friends with "superfluous appendages". (Kidding)
Posted by Chevaliermusic (72 comments )
Reply Link Flag
Liars....
"Henson said the decision to increase the price of the 768kbps service had nothing to do with increased demand."This is a business decision that prices the service more in line with its value."

Who does he think he's kidding? Pricing in line with its value? The value IS determined by the demand. Notice how he didn't say anything about increased costs. Their costs didn't go up. Demand did. Ergo, the price is being raised due to increased demand.
Posted by JohnnyL (89 comments )
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