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SBC latest Baby Bell to slash DSL prices

Local-phone monopolists competing in the fast-growing telecom market are finding themselves in the unfamiliar position of trailing badly.

SBC Communications is the latest Baby Bell to slash its residential digital subscriber line prices, as the longtime monopolists in local-phone service, now competing in this fast-growing telecommunications market, find themselves in the unfamiliar position of trailing badly.

In a quick move following its new DSL partnership with Prodigy Communications, SBC announced today that it is reducing the cost of its enhanced residential DSL service by $20 per month, resulting in a $59.95 monthly charge that includes a customized, DSL-equipped Compaq Presario valued at $1,000. SBC recently acknowledged that it has fallen far short of its goal under its $6 billion Project Pronto to sign up DSL customers.

In July, Verizon Communications lowered the cost of its entry-level residential Personal Infospeed DSL service by $10 per month to $39.95, bringing it more in line with some of the major broadband cable competitors in its region, such as AT&T, Comcast and Cablevision Systems.

The Federal Communications Commission reports that Bell companies remain almost an afterthought in the residential broadband market. According to the FCC's second annual broadband report, released last month, cable providers hold 78 percent of the residential broadband market, with DSL providers accounting for 16 percent.

Many of those DSL providers are not Bell companies, however, but fast-growing competitors such as Covad Communications and Rhythms NetConnections. Those competitors encountered their own problems during the union strike against Verizon last month, when they could not set up new accounts because of the need for a Verizon technician to activate residential lines.

The number of homes with high-speed Internet service tripled last year, the FCC said, to more than 1 percent of U.S. homes, and that growth rate is continuing. The commission also noted that new competitors on the horizon should fuel that growth. Fixed-wireless providers such as Sprint and WorldCom, which provide consumers with a radio transmitter/receiver for two-way, high-speed Internet access, are overcoming line-of-sight and other technical limitations.

Satellite providers such as Gilat Satellite Networks are overcoming return-path obstacles, but already consumers can subscribe to DirecTV's DirecPC with a telephone-line return path for $19.99 monthly if they provide their own Internet service provider.

Wireless phones are expected to offer high-speed Internet access in the near future, as soon as the hardware is ready for the market and wireless providers can obtain the FCC licenses they need to offer 3G, or third-generation, Internet services. see story: Find a broadband providerDeployment of such wireless services, which include Internet access speeds of up to 2 mbps (megabits per second), is already beginning in Europe.

Perhaps acknowledging their slow start in residential broadband, some Bells are partnering with outside companies in DSL deployment. Shortly after SBC announced its partnership with Prodigy, Verizon said it would merge its DSL services with those of fast-growing NorthPoint Communications.