Broadband Price Wars Could Hurt Consumers

Today the Wall Street Journal drills into another aspect of the maturing broadband market: price wars. But instead of being good for consumers, in the end these may actually end up hurting them — by enticing them into capped services from cable providers or tying them to plans with early termination fees.

With fewer new customers signing up with DSL or cable providers, we’ve tracked the side effects of maturity such as negative advertising and the boosts in speed offered to prospective customers. To illustrate the expected price wars, the WSJ cites price cuts from Verizon and pricing guarantees from AT&T, the nation’s two largest DSL providers, and assumes cable companies will respond. The cable guys had pretty much won the war when it came to attracting new broadband subscribers, partly because they can advertise faster speeds, and because the newer high-speed services from the phone companies are cannibalizing DSL sales.

This is a price war that will be played out among the average user of “garden variety broadband services,” as the WSJ calls it. My guess is these are the folks using what Comcast cites as the average 2 GB or 3 GB per month, rather than those of you taking the 250 GB challenge in response to the caps some cable companies are implementing on their user base. In Time Warner’s case, the caps will likely benefit from price wars as a way to sign up customers under the new capped plans for lower prices. I noticed Verizon’s offer also contains an early termination fee. Both of which mean that in this price war, some consumers will lose.

image courtesy of Verizon

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