BellSouth lowers DSL pricing

BellSouth last week became the latest local exchange carrier to drop its DSL service rates in an effort to convert more dial-up and cable modem Internet access users.

BellSouth last week became the latest local exchange carrier to drop its DSL service rates in an effort to convert more dial-up and cable modem Internet access users.

The carrier’s new DSL Lite, priced at $35 per month, offers transmission speeds of 256K bit/sec downstream and 128K bit/sec upstream. That’s a lower-speed but also lower-priced broadband offering than the company’s original FastAccess DSL service, which costs $45 per month for transmission speeds of 1.5M bit/sec downstream and 256K bit/sec upstream.

Last month SBC lowered the price of its DSL service by 14%  on the heels of Verizon, which slashed its DSL rates in May by 30%.

The LECs are not so much trying to compete with each other on price, but rather are attempting to win over customers who were thinking of going with cable modem service, says Jason Knowles, an analyst at Current Analysis.

Cable service costs more

Cable modem Internet access service generally is priced higher. Comcast, for example, charges $43 per month for transmission speeds of 256K bit/sec upstream and up to 2M bit/sec downstream. Time Warner Cable charges $45 per month for transmission speeds of 356K bit/sec upstream and up to 2M bit/sec downstream.

BellSouth’s price move is also an effort to migrate some of the carrier’s approximately 700,000 dial-up Internet access customers to broadband.

“The service is an idea born out of market research where customers told us they wanted faster service, but they didn’t need the higher-speed DSL,” says Michael Bowling, vice president of broadband marketing at BellSouth.

While BellSouth’s offering might not appear as compelling next to SBC and Verizon, which offer higher-speed DSL services at a lower rate, BellSouth has been able to migrate more of its customers to DSL than its competitors. This might be one reason why it did not cut the price of its FastAccess offer.

According to Merrill Lynch research, BellSouth has 1.1 million DSL subscribers over 24.5 million access lines. That’s a DSL customer penetration rate of 4.6%. Although SBC and Verizon have more customers – 2.5 million and 1.8 million, respectively – each has a lower customer penetration rate. SBC has 56.7 million access lines, and Verizon has 57.5 million access lines, with customer penetration rates of 4.4% and 3.2%, respectively, according to Merrill Lynch.

While these DSL services from BellSouth, SBC and Verizon are aimed at residential customers, a large number of customers use these services occasionally or regularly to access their corporate networks from home.

These users should check their service rates. Network managers who let employees get their own broadband access and then expense those charges to the company might want to recommend that employees review their service charges – especially if the company is footing the bill.

If employees are paying $50 per month for residential DSL today, then they likely are paying too much.