SBC Communications (NYSE:SBC) is showing its aggressive stripes once again, by lowering the price of its broadband DSL offering to unheard-of lows. It's all part of the scuffle for customers as consumers increasingly switch to high-speed Internet. (And why shouldn't they? Over the past year and a half or so, the going's been good when it comes to getting broadband for a good price.)
SBC, a Motley Fool Stock Advisor selection, will now charge $14.95, and that's not some temporary promotion meant to rope you in, either. Yes, you heard it right, $14.95. You're probably thinking about how it's less than the price many Internet providers charge for slow dial-up service. Plus, it definitely undercuts competitors such as Verizon (NYSE:VZ) and makes the prices that cable giants such as Comcast (NASDAQ:CMCSA) charge for their broadband sound downright luxuriously expensive.
I knew this sounded familiar when I read the news today -- way back in October 2003, I wrote a little piece about SBC having cut broadband charges to the then-unheard-of level of $26.95. Back then, I emphasized the problem that Internet providers like Time Warner's (NYSE:TWX) AOL, EarthLink (NASDAQ:ELNK), and United Online (NASDAQ:UNTD) faced -- then as now -- with their traditional dial-up offerings. To put some perspective on this, AOL charges $23.90 per month for its dial-up access. (It might be the companies that still provide dial-up who really have reason to worry about developments like this, when customers can choose low price and high speed for their Internet service.)
Obviously, SBC is able to continue to lower the bar on what it charges for broadband -- and the stakes are high these days, given that the cable companies have had great success offering high-speed Internet access bundled with their television offering. They're even offering phone service now.
Given SBC's new low, low price for broadband, its shareholders might have reason for concern about the impact on profit margins, although the obvious plan is to line up as many customers as possible for its bundled product offerings. However, given the competitive landscape, one might venture to guess that such a hyperaggressive stance may be the key to SBC's remaining a strong contender -- and, maybe one day, as it all shakes out, a strong survivor. Meanwhile, those who have stakes in telecom providers had better get accustomed to the hypercompetitive climate that currently exists.
Read more about SBC in the following Foolish commentary:
- Is SBC flying under the radar?
- Some believed that SBC's purchase of AT&T (NYSE:T) was no blunder, while others thought it should just say "no."
Alyce Lomax does not own shares of any of the companies mentioned.
