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Analyst: DSL price cuts are working

Sun, 06/05/2005 - 8:00pm
Jeff Baumgartner

Although cable is holding on to its advantage in higher-income homes, DSL price cuts are hitting home with price-sensitive broadband customers, according to Leichtman Research Group (LRG).

In the past year, phone companies overtook cable as the preferred provider among non-broadband households interested in getting broadband services, LRG said.

In a telephone survey of 1,600 randomly-selected homes in the U.S., LRG also found that of those interested in getting broadband, 32 percent preferred to get it from their local phone company, while 26 percent preferred to receive it from their local cable company. Those numbers have almost flip-flopped from last year, when 35 percent favored cable, and just 23 percent favored the local telco.

LRG also discovered that the reported mean monthly spending on cable broadband services is roughly $40, versus $36 for DSL. Last year, the services were nearly identical. Overall, the mean income of broadband subs is 35 percent greater than dial-up Internet subs - a prime target of DSL price-cutting.

Still, the mean annual household income of cable modem subs is 17 percent higher than DSL, LRG found.

"While cable still has many more broadband subscribers than DSL, and will maintain an advantage for years to come, DSL's emphasis on price and extended availability is clearly having an impact in expanding the category to more cost-conscious consumers," said LRG President & Principal Analyst Bruce Leichtman, in a statement.

There are more than 35 million U.S. cable modem and DSL subs, a figure that is likely to double in the next four years, he predicted.

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