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Cable MSOs Dismiss Cheap DSL Deals

5/11/2003 08:00:00 PM Eastern

Cable executives are striving to calm fears of a high-speed-data price war, contending that consumers will get tangled up in the strings attached to new telco price plans for DSL service.

Verizon sent a brief shudder through cable stocks a little more than a week ago by dropping DSL prices to $35 a month, undercutting the $40 that Cox, Comcast and other MSOs typically charge for high-speed Internet service. (Data subs that don't also take cable get charged $45-$55 monthly.)

Baby Bell SBC is touting an even cheaper price in some markets, $25 a month (before the extensive fine print, of course).

High-speed Internet service has become a great business for cable operators, particularly since weak and expensive DSL competition has allowed them to raise their prices. What now?

Cox Communications CEO Jim Robbins said the MSO doesn't plan to respond. "We really have some questions as to the sustainability and the profitability of our competitors' actions here. But we're not experts on their economics. We just know what we know, and we know what our customers want."

Cox executives are particularly critical of SBC's deal. Senior Vice President of Marketing Joe Rooney said, "The SBC offering has more strings attached than Pinocchio."

To get the cheap rate, SBC's customers must buy "bundled" local and long-distance phone services costing an additional $32 and sign one-year contracts.

Insight Communications President and COO Kim Kelly agreed. "I'm not seeing any pricing pressure on our modem products. In fact, that category is just going up, and we had our best quarter in gains."

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