Verizon, following a quarter when it lost 133,000 DSL customers, has rolled out an offer of up to six months of free DSL with a yearlong contract.

Verizon's entry-level DSL (Digital Subscriber Line) service, with download speeds of up to 768 kilobits per second, will be free for the first six months for people who are Verizon telephone customers and who sign up for a year. The service will then revert to its current US$19.99-per-month price. Verizon's higher-speed 3-megabit-per-second DSL service will be free for six months to Verizon telephone customers, and $29.99 per month after that.

People who aren't Verizon telephone customers can get one month of free DSL service with a one-year contract. Verizon rolled out the new pricing plans last month.

AT&T has also recently repriced its DSL offerings. AT&T's basic DSL package is now priced at $19.95 a month for 1.5 megabits of download speed, $20 less than the old rate.

In July, Verizon reported that it had lost 133,000 DSL customers during the second quarter of 2008, the first time a major U.S. broadband provider has seen a drop in DSL subscribers during a quarter, said Jeff Kagan, an independent telecom analyst.

Those losses in DSL customers were offset by an increase of 187,000 subscribers to Verizon's Fios, fiber-based broadband service, but Verizon's net increase of 54,000 broadband subscribers for the quarter was down significantly from previous quarters. Verizon added more than 200,000 new broadband subscribers in each of the previous four quarters, and more than 400,000 new subscribers in each of the six quarters before that.

Broadband growth was also down at AT&T and Comcast, the two largest broadband providers in the U.S., during the second quarter of 2008, although the drop was less dramatic at Comcast.

Verizon spokesman Kevin Laverty didn't directly answer a question about how the pricing was related to lower demand for DSL.

"Marketing strategies are constantly evolving based on a number of variables -- what the competition does, the economy and what consumers want," Laverty said. "DSL offers consumers an affordable and reliable option; and in times when consumers are tightening their belts, they want the best value for their data dollar, if you will. So we're taking the approach that getting them in with a good pricing offer will encourage them to stay with us in the future."

Verizon and AT&T seem to "have launched a price war" on DSL service as the demand levels off, Kagan said.

"This is good news for customers because the price they pay for some of these DSL services is going down," he added in an e-mail. "Almost two-thirds of the marketplace already has a high-speed internet service. These services are the first wave that we have been using during the last decade."

Other broadband companies may have to cut prices to compete, Kagan added.

» posted by ITworld staff

IDG News Service

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