Reuters reported Wednesday that telecom heavyweight SBC Communications (NYSE: SBC ) plans to cut its price for DSL to $26.95. Yes folks, that's sinking darn close to what many pay for plodding dial-up.
Cable Internet has been the big success in broadband up till now. However, the truth is many households are still making do with dial-up's busy signals and snail's pace. Cable Internet, provided by companies like Comcast (Nasdaq: CMCSA ) and Cox (NYSE: COX ) , is still priced at levels that many penny-conscious households see as a luxury, with fees in the $40 per month range.
But this isn't about cable Internet. This is about the millions of dial-up households itching for high-speed connections at prices they can justify.
Verizon (VZ) made headlines in May with its more consumer-palatable cut to the $30 per month range for DSL. (Its web site boasts an introductory DSL offer of $29.95 for three months, which shifts to $34.95 thereafter.)
Meanwhile, many of the tried-and-true dial-up providers still charge in the $22 to $24 per month range. While companies like AOL Time Warner's (NYSE: AOL ) AOL, Microsoft's (Nasdaq: MSFT ) MSN, and Earthlink (Nasdaq: ELNK ) still have quite a few customers, many have moved on to higher speed or cheaper services. SBC's move, and any rival price cuts, could herald a new surge of dial-up defections.
According to Reuters, Verizon's vice chairman doesn't see the need to shave more dollars off its price to compete. However, SBC's $26.95 fee has an awfully compelling ring to it, and we've yet to see how other high-speed Internet providers will react.
It's been a long wait for DSL to thoroughly penetrate the mainstream residential market. But with a good dose of competition and broadband prices creeping closer to comfort, the grating music of modems dialing and non-stop busy signals may soon become anachronisms.
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