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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: Michael F. Donadio who wrote (21311)	5/5/2003 1:53:19 PM
From: Jon Taulbee	Read Replies (1) \| Respond to of 21342

Verizon May Set Off Price War By Cutting DSL Rates Verizon Communications Inc.'s (VZ) decision to reduce the price of its high- speed Internet service by as much as 30% could spark a price war between telecommunications and cable companies as they fight for broadband customers, Monday's Wall Street Journal reported. Prices of cable stocks fell Friday as investors worried that Verizon Communications' move would force cable companies to cut their prices for high- speed Internet via cable modems, or take market share. The New York telecom company slashed monthly fees for its high-speed Internet service via digital subscriber lines to $34.95 a month from $49.95, and to $29.95 when ordered with a bundle of other fixed-line and wireless-phone services. Such a move could be troubling for the cable industry because strong broadband sales have been one of the few bright spots over the past year. Cable's traditional video business has suffered from increasing competition from satellite television. "Cable modem service is the whole enchilada [for cable companies]," says Jason Bazinet, a cable analyst with J.P. Morgan. "There's no more customer growth in the video business." Verizon's new DSL fee is now well below current broadband offers from major cable operators, which charge $40 to $45 a month for cable TV subscribers. Typically, cable companies charge $5 to $10 more if a household wants only a high-speed hookup. Verizon's DSL move, announced Friday, could put pressure on AOL Time Warner Inc.(NYSE:AOL) as investors worry that lower DSL prices will accelerate AOL's loss of dial-up subscribers to broadband. Verizon's offer is about equal to what America Online subscribers pay for dial-up, assuming they spend about $10 a month for a second telephone line. Verizon and SBC Communications Inc.(NYSE:SBC) , the nation's largest local phone companies, are increasingly aggressive on DSL pricing after watching the cable companies build considerable dominance over the high-speed Internet market. At the end of last year, some 10.6 million households had cable modem hookups compared with 5.1 million with DSL connections, according to Yankee Group, a consulting firm. Verizon officials feel they also need to compete more aggressively in the high speed Internet market as cable companies increasingly enter their domain of the local phone market. DSL has been largely unprofitable for the Bells, even after they have invested billions of dollars in rolling out the service. Technology needed to connect customers to DSL costs the phone companies more than it costs cable operators to connect their broadband customers. There are many different phone systems in the U.S., which requires more work for phone companies to transmit data; cable systems are simpler because all the data are transmitted through the same pipe. Verizon will advertise the new rate in selected markets beginning May 13. Officials declined to provide further details on the new pricing plan. Wall Street Journal Staff Reporters Almar Latour and Peter Grant contributed to this report. Dow Jones Newswires 05-05-030034ET Copyright (C) 2003 Dow Jones & Company, Inc. All Rights Reserved.