The company trimmed prices for its most popular residential digital subscriber line (DSL) service by about 20 percent in the former GTE local phone territories. Verizon slashed its price to $39.95 from $49.95 as of Sept. 1 in its Midwestern, Southeastern and Western states and will give modems to customers nationwide for free with a long-term commitment.
The move follows a similar price cut in the old Bell Atlantic region in July.
Most broadband providers have settled on about $40 per month for average consumer high-speed Net access plans. By comparison, consumers typically pay about $20 per month for most full-service dial-up Internet access accounts, which are several times slower than broadband connections.
"Bell Atlantic had already cut its prices, so (Verizon is) just trying to get everything aligned throughout the network," said Pat Hurley, an industry analyst at TeleChoice, a DSL consulting firm.
The company provides high-speed, or "broadband," Internet access in 25 states and Washington, D.C., according to a company spokeswoman. The availability of broadband connections industrywide, however, remains limited.
Although the price cuts represent part of the ongoing process of integrating two massive phone companies, the move also marks the latest in a trend toward price cuts in the increasingly competitive broadband market. Competition from smaller DSL companies and cable operators, with their Excite@Home, Road Runner and High Speed Access units, has contributed to the price wars.
Analysts say the broadband pricing battles have stabilized for now but are likely to continue as the industry grows.
"It's not done yet. I wouldn't be surprised to see it come down another $5 or $10 per month (across the industry) over the next year," TeleChoice's Hurley said.
In addition to the 20 percent lower residential DSL prices, Verizon today announced price cuts for its business DSL services. Certain regions saw cuts to $69.95 from $91.50 per month, while small and midsized businesses in other regions will pay $49.95, down from $64.95.
Verizon also dropped its modem charge for all new subscribers who commit to a one-year contract. The company already had waived installation fees for customers who install and provision the service without the help of a Verizon technician. About 90 percent of Verizon's 250,000 DSL customers install the service themselves, Verizon spokeswoman Joan Rasmussen said.
The large Baby Bell local-phone companies such as Verizon and SBC dominate the DSL market, serving 914,000 customers as of late June, according to TeleChoice. About 80 percent of those were residential customers.
DSL competitors such as Covad Communications, Rhythms NetConnections and NorthPoint Communications served 277,000 customers, largely businesses, according to TeleChoice. Verizon took control of NorthPoint's assets last month in an effort to expand its DSL offering.