Broadband battle lines drawn

* Broadband competition mapped out

The battle for broadband market share between phone companies and cable companies is heating up with both lower prices and higher speeds. With recent FCC rulings, we expect the battle to turn red-hot.

In June, SBC announced it would offer its SBC Yahoo DSL Express for $14.95 per month, with speeds at 384K bit/sec to 1.5M bit/sec. BellSouth offers FastAccess DSL Lite for $24.95 per month at 256K bit/sec to 384K bit/sec. Last week, Verizon lowered its DSL rates to $14.95 per month for access rates from 128K bit/sec to 768K bit/sec.

The cable companies have not been sitting idly by. While cable modem services generally cost more, cable providers have focused on offering higher speeds. For example, Comcast offers 384K bit/sec to 4M bit/sec at $42.95.

Most providers have “strings attached” that require a specific contract term and/or service bundle; bundles and promotions lower the list price for most services.

Earlier this month the FCC removed the regulatory requirement for incumbent local carriers to provide DSL broadband access to third-party ISPs under the same terms and conditions as their own ISP. The FCC based its ruling on an earlier U.S. Supreme Court decision that classified Internet services as an “information service,” not a “telecommunications service.”

Companies like AOL and Earthlink may have to re-think their business models. While third-party ISPs get one year before they must buy access facilities at “market rate,” the battle for faster and cheaper broadband will continue to rage.

As the local telcos keep up their frenetic pace of fiber and high-speed broadband build-outs, these broadband battles are moving toward a full-scale market-share war. And as cellular companies deploy 3G wireless broadband, we expect a very interesting 12 months ahead.

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Copyright © 2005 IDG Communications, Inc.

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