SBC slashes DSL price to $14.95 a month

updated 8:12 p.m. ET June 1, 2005

NEW YORK - SBC Communications Inc. is cutting the price for high-speed Internet access to $14.95 per month for new subscribers who sign up online, marking another aggressive move to add and retain customers in advance of the big telephone company’s push into cable TV service later this year.

The promotional rate for SBC Yahoo DSL Express, which requires a one-year contract and lasts for 12 months, is priced well below what many dial-up Internet services as well as rival broadband providers charge.

America Online, the biggest dial-up provider with more than 21 million subscribers, charges nearly $24 a month for a far-slower connection. Rival providers of DSL and cable-based broadband generally charge from $30 to $45 a month.

The DSL price cut comes two months after San Antonio-based SBC reduced the monthly fee for unlimited local and long distance calling from $49 per month to $40.

That’s well below what rivals such as Verizon Communications Inc. and BellSouth Corp. charge for the same bundle, and competitive with what many cable companies are charging for phone service using voice-over-Internet technology.

Both moves can be seen as a campaign by SBC to hold off cable TV rivals who sell phone and Internet service long enough for SBC to launch new technologies and services starting later this year.

SBC, which owns Cingular Wireless in partnership with BellSouth, is spending billions to rewire large portions of its copper-based phone network with fiber-optic cables so it can introduce cable television and speedier Internet connections.

The company hopes to lure subscribers with next-generation services, particularly interactive video using IPTV technology, which melds the Internet with TV programming.

“We believe the company intends to drive further subscriber growth ahead of its video rollout and fend off cable competition,” John Hodulik, telecom analyst for UBS, said in a note to investors. “While we do not expect this pricing strategy to be implemented across the industry, SBC’s move may force the cable (companies) to get more aggressive.”

The $15 rate for DSL brings entry-level download speeds of between 384 kilobits per second to 1.5 megabits per second. The price will revert after one year to the regular fee, currently about $27.

As part of the promotion, SBC also is offering a speedier connection of up to 3 Mbps for $25 a month, also for a one-year term. The regular rate for that service is currently $40.

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