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BellSouth cuts DSL pricing

Phone company reduces the price of its 3mbps DSL service to encourage consumers to upgrade.

BellSouth has cut pricing on its 3-megabit-per-second service by $5 per month to entice customers to upgrade to higher speeds.

On Monday, the telephone company announced it would reduce the monthly price of residential FastAccess DSL Xtreme, which offers download speeds of 3mbps and 384 kilobits per second upstream, to $37.95 per month. The price cut was announced in an effort to get customers subscribing to its 1.5mbps service, which costs $32.95 per month, to upgrade to a faster service, said Nadine Randall, a spokeswoman for BellSouth.

"With the reduced price, there will now only be a $5 differential per month between the 3mbps service and our most popular service, which is the 1.5mbps," she said. "We're trying to make it simpler for people to upgrade."

BellSouth offers four tiers of service. Its fastest service was introduced in November and is called the FastAccess DSL Extreme 6.0, which offers 6mbps downloads and 512kbps uploads for $46.95 per month. Next down the line is FastAccess DSL Xtreme, which has the new price reduction. Then there is the FastAccess DSL Ultra, which offers 1.5mbps downstream and 256kbps upstream for $32.95 per month. And finally, the DSL Lite service that features speeds up to 256kbps downstream and 128kbps upstream for $24.95 per month.

BellSouth says that it's seeing a lot of growth in its broadband business. It ended the third quarter of 2005 with more than 2.6 million DSL customers. But in total, the company still lags in terms of total subscribers to the largest cable competitor in its region, Cox Communications, which has about 3 million subscribers, according to Strategy Analytics.

The battle for broadband subscribers heated up in 2005, as phone companies began offering lower-priced services to attract consumers who may be less tech-savvy. Cable providers led the market in total broadband subscribers in the third quarter of 2005, with 20.8 million total subscribers compared to DSL's 17.2 million subscribers, according to Strategy Analytics. Traditionally, cable companies have focused on increasing speeds to remain competitive, resisting sharp price cuts.

"BellSouth is taking a very market-oriented approach versus the cable television industry, which is simply charging the highest price for the fastest service, period," said Jeff Kagan, a telecommunications industry analyst. "While speed makes great headlines, not every customer needs the highest speed, and would rather turn down the speed and save money."

Unlike other phone companies, such as Verizon Communications and AT&T, which started offering $15-per-month service to customers last year, BellSouth has taken a more measured approach to pricing. It has offered some promotions, but this is the first permanent price cut it has initiated in more than a year.