Will Verizon drive high-speed prices down?

Consumers looking for "the better deal" may be getting help from Verizon as it tries to slow the loss of DSL subscribers by offering its Internet-phone bundle at a 31 percent discount for new customers. The six-month-long deal puts a $45 price tag on services that currently cost $65 a month. The price reduction follows an industry low last quarter, when Verizon became the first provider ever to see a drop in DSL subscribers.

With more than 60 percent of U.S. households now sporting a high-speed Internet connection, new broadband customers are getting harder to find. Broadband growth slowed dramatically in the second quarter, with just half the new subscribers added compared to a year ago. Most of the growth, some 75 percent, was in the cableco camp. Experts say Verizon's move is likely to spur other telcos--and cablecos--to join in price slashing to retain customers in a maturing market, ala Europe. In fact, AT&T now is guaranteeing its pricing for two years.

"Phone companies can't just sit back and let cable companies take that much of the broadband market, or they will eventually cede everything," UBS analyst John Hodulik told the Wall Street Journal.

If the battle heats up, don't expect Verizon's FiOS and AT&T's U-Verse to escape unscathed. If prices drop too low, consumers may just opt for a little less speed for a big monthly savings, not exactly where telecos are hoping to head.

For more:
- See the Wall Street Journal story

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