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Summary:

SBC’s new low $14.95 a month pricing for DSL service is the last nail in the coffin for dial-up, at least in those locales where high speed connections are available. (The offer is only available online.) FCC says that’s over 90% of the country, but then […]

SBC’s new low $14.95 a month pricing for DSL service is the last nail in the coffin for dial-up, at least in those locales where high speed connections are available. (The offer is only available online.) FCC says that’s over 90% of the country, but then we might be stretching a little. Bad news for AOL, NetZero and all those who have made a living out of selling dial-up connections.

Even though this price is for new customers, the lower prices are going to accelerate the price war between cable and phone companies, at least for new customers. I am sure, cable guys are going to counter this move with same priced service with 1 megabits per second minimum. But the new aggressive move could be a way to throttle down cable operator’s current speed advantage. Alternatively, since we have been noticing all the issues with IPTV – technical and political – which means the higher speeds could take a little while, this could be a defensive move to shore up against line losses to cable operators a chance to mop-up the broadband market. By being aggressive, SBC can lock in a lot more people. That’s smart. Hey no one is talking about the upload speeds on these budget connections. I hope there is enough juice to make VoIP calls. (Or one could call it killing two birds with one stone!)

  1. The FCC says nearly all Zip codes have broadband–not 90 percent of America can get it. It bugs me that they’re using Zip codes because, of course, the sparser areas have fewer Zip codes, which means that you can have one DSL or cable modem in a county in Texas and that county has broadband.

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  2. Broadband Price Wars

    Next step: Incent dialup internet subscribers to convert to DSL and shut down/sell off the dial access network, reducing operational expenses. (Telcos love opex reduction business cases.)

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  3. Glenn

    that was the reason why i said stretching a little. well you know how it all works. anyway thanks for the reminder. by the way this is an argument i have had with others for a long time

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  4. Interesting commentary on Reuters:

    http://www.reuters.com/newsArticle.jhtml?type=internetNews&storyID=8659528

    The SBC quotes are refreshing. They are very matter of fact about their intentions and what’s at stake:

    Executives at SBC say they have a two- to three-year window to add as many digital subscriber lines as possible, before cable companies complete their rollout of telephone services and pursue SBC customers with voice, video and data packages.

    “It’s about market share,” said SBC Chairman and Chief Executive Edward Whitacre in an interview on Thursday with Reuters. “The sooner we get there and the bigger piece of market we get, the better off we are. It’s essentially us and the cable companies vying for that.”

    SBC added 504,000 DSL lines in the first quarter of this year, a record increase for the company, but Whitacre had asked executives if it was possible to add 1 million a quarter, a level he says is probably not realistic today.

    The company has been among the more aggressive DSL providers on price, offering a $19.95 monthly rate for customers who sign up over the Internet and agree to a one-year contract. While its first-quarter growth was a record, SBC’s 5.6 million DSL lines are equal to about 11 percent of its total phone lines.

    “What we find is if you sell DSL, the customer just doesn’t churn,” said SBC Chief Operating Officer Randall Stephenson in an interview last week, referring to the rate of customer turnover.

    “Once you get them, you’ve got them,” Stephenson added. It’s very important to us to get out ahead of the game and get broadband deployed to every household we can get it deployed in.”

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  5. This move is going to be huge for SBC, people were sticking to dial up for 3 reasons
    a. cost effectiveness
    b. portability of your internet connection
    c.unavailability of broadband in the neighborhood
    If SBC plans to offer a dial up account on top of DSL,they completely covered a. and b., which would cause a huge churn for dial up companies

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  6. Find SBC’s new low price, as well as all other Broadband Internet Service Providers at the new #1 most popular destination site to find Broadband Providers…

    http://www.broadbandbuyer.com/homeservices.htm

    Thanks Om!

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  7. [...] think.” Somehow I don’t think it going to be like that for a while. Especially when SBC sells barebones DSL $4-a-month cheaper than dial-up connections! More [...]

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  8. A 4th reason (in response to Nitin Ahuja’s post)others are sticking to their dialup, is because SBC is binding (enslaving) the customer to a time commital contract, alhtough the cost is competitive.
    However, certainly the cost of breaking that contract is no competition for whatever reason one must do so. If you had to move and outside of the SBC DSL location is the primary way of getting out of that contract, but can you if it happens to be that your budget no linger allows it? My prediction is that SBC will go lower in the near future due to cable competition. Oh, and Time-Warner is another story of a close relative;i.e., ‘lure and trap.’

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  9. [...] Om Malik posted an article about SBC/Yahoo’s new low $14.95 a month limited-time offer for DSL service. Om feels this might be the last nail in dial-up’s coffin (for those locations that have DSL access). I’m skeptical because SBC/Yahoo’s promotions have been cheaper than providers like AOL for some time. I agree that this promotion (being this cheap) might make some AOL users scratch their heads and wonder why they use AOL. However, I know from experience that dial-up users feel they don’t use their computer enough to make it worth while for them to switch. $14.95 is a good price – what I consider a pivotal price for dial-up users to switch if the price after the 12 months isn’t too steep. So that leaves me wondering two things: [...]

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