Desperation Behind Even Cheaper DSL?

Man…. DSL is getting cheaper. SBC/AT&T has cut its prices again to ultra-low $12.99 per month ( down from $14.99 per month, which was lowered from $16.99 per month mid-January) as it trolls for new sign-ups. These prices are good for the 1.5 Mbps downstream / 384 Kbps upstream DSL connection. Want more bandwidth? 3 Mbps downstream / 512 Kbps upstream service will cost you $17.99 per month, down from $21.99 per month. These prices are good for a year, but then you can switch back to the cable guys, who are bound to offer some sort of a deal. If you switch from a cable provider, then you get three months free. SBC/T is going for “scrape the barrel bottom strategy.” Now contrast this with BellSouth, which is making more money by selling faster more expensive connections.

Bottom line is DSL demand is not what it used to be! In the 3rd quarter of 2005, SBC/AT&T added 528,000 subscribers, but in the fourth quarter of 2005, the new subscriber numbers fell to 425,000. According to UBS’ analyst report, the company said it had reached 7 million DSL subscribers- or just over 80,000 new subscribers in January. Lets say if that rate continues, by end of first quarter 2005, SBC/AT&T would add only 240,000 subscribers. Hence the price cuts. With 26% DSL penetration of its households there is nothing much they can do – except prices. If they don’t then it won’t have many triple play customers to sell the much talked about “video services.”