Verizon Drops DSL Price

Making an aggressive play for broadband customers, Verizon has cut its monthly DSL fee $10 to $34.95, a move that could prod rivals to follow or develop new services to justify higher prices.

The rate, currently offered to new customers as part of a promotion that includes Microsoft’s MSN 8 software, is expected to be extended to existing subscribers next month.

A spokeswoman for New York-based Verizon was not immediately available for comment.

Analysts say the move should help broadband adoption rates as well as shake up the Internet service provider market.

“Verizon’s agenda seems not only to increase its share vs. cable . . . but also to move to accelerate the migration of dial-up customers to high speed,” Jessica Reif Cohen, an analyst at Merrill Lynch, wrote in a note to investors.

Cohen noted that the new price is effectively the same as America Online’s dial-up service ($23.95 per month, plus $10 per month for a second line) as well as $10 less than Time Warner Cable’s RoadRunner offering. Covad Communications, which offers DSL, charges $39.95 for its basic service.

For AOL, which has seen its subscriber base erode in recent months, Verizon’s move complicates its strategy. It’s unlikely that it will cut its dial up costs, but it also makes a rate hike more difficult.

It also makes AOL’s own broadband offering, currently $55 per month, seem pricey.

“(Verizon’s pricing) places increased pressure on AOL to develop and successfully implement HBO-type premium servce to ensure the successful rollout and longevity of its broadband service,” Cohen said.

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