SBC Makes the First Cut

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In move that could set off a high-speed data price war in some cities, SBC Communications Inc. said last week it will begin charging customers that order its digital subscriber line service online $14.95 per month for their first year of service.

The discount offer — priced at less than half of what cable operators charge for cable-modem service — will evidently only be available for a limited time. SBC spokesman Andy Shaw wouldn’t say exactly when it will expire.

Subscribers who drop the DSL service before the 12-month promotion expires will be hit with a $200 termination fee, SBC said.


SBC officials hope to woo dialup Internet customers who’ve passed on high-speed data offers in the past, in addition to consumers who already subscribe to cable-modem service.

“DSL is a very strategic, important piece to our whole business plan,” said Shaw. “It’s sticky, and once people get it [DSL], we fully expect that people are going to be very agreeable to buying other products from us.”

The $14.95-per-month price will give customers access to the SBC Yahoo! DSL Express service, which offers speeds of up to 1.5 Mbps. The promotion will also pitch consumers the ability to get the faster SBC Yahoo! DSL Pro product, which offers 3.0 Mpbs download speeds, for 12 months at $29.99 per month, again provided they order the service online.

Previously, SBC’s lowest-priced DSL package was $19.95 per month for customers that ordered SBC Yahoo! DSL Express online.

SBC’s marketing campaign will target consumers that pay more for high-speed data services from cable operators. Time Warner Cable systems charge $39.95 per month for Road Runner high-speed service, while Comcast Corp. systems charge $42.95 to $57.95 per month.

Comcast Online spokeswoman Jeanne Russo said SBC’s pricing move won’t compel Comcast to cut prices for its cable-modem service “at this time.”

Pointing to additional features of its high-speed product, such as the Rhapsody music service, Russo said Comcast believes its high-speed service offers more value than SBC’s DSL product, and that it makes sense for the products to be priced differently.

“Although the products are both considered broadband connections, we view our high-speed data service having little in common with basic DSL Internet access,” Russo said.

Cablevision Systems Corp. offers some of the lowest high-speed data pricing of all cable MSOs, charging customers that order its video and telephone bundle $29.95 per month for Optimum Online.


One analyst said he believed SBC would lose money for each new customer it signs up for DSL service at $14.95 per month.

When asked if SBC would lose money on the promotion, Shaw noted that the telco’s strategy is to “introduce sticky products” that will encourage customers to order more products.

Among those new products: A video service that SBC plans to use to target cable and satellite customers. Through its “Project Lightspeed” initiative, SBC is building a nationwide Internet-protocol infrastructure through which the company hopes to deliver new video services next year.