Bit Rate

AT&T Kicks Up DSL Fees

2/05/2008 9:59 AM

Getting online just got more expensive for thousands of AT&T customers: The telco is kicking up the price for most of its DSL packages by $5 per month in its traditional 13-state SBC territory.

"Our prices are still in line with the market and much lower than our cable TV competitors," an AT&T spokeswoman told the Chicago Tribune.

Well… not much lower, if at all. AT&T, for example, will now charge $25 per month for 1.5-Mbps downstream "Express DSL" service. Cox in Oklahoma, where AT&T is the incumbent telco, charges $19.99 for 1.5 Mbps down and offers up to 7-9 Mbps at the same price as part of a bundle. (AT&T says there is no price change for 6 and 10 Mbps U-verse Internet DSL services, or for the $10 768-Kbps service.)

The takeaway, according to Sanford Bernstein analyst Craig Moffett, is that there’s no price war in sight between telcos and cable companies.

"Since the slowdown in broadband growth nationwide began last summer, expectations of a price war have heightened," he wrote in a note Monday. "There has been a sharp differential between DSL and Cable HSD pricing for some time. Expectations have been that this gap will have to close. It has. But perhaps not in the direction many investors have been expecting."

The same thing is happening in the video market. Verizon ratcheted up prices by close to 12% for its most-popular TV package for new subscribers after Jan. 20. And Comcast, Time Warner Cable and other cable operators also raised rates in the new year, too. 

Noted Moffett, "The uniform direction of these price increases makes one issue clear, at least to us: the telcos, cable operators and DBS providers will compete aggressively for voice, video and data customers – but likely not on price." 

All providers are "pricing up the base rather than pricing down service to gain flow share as growth slows."