The Wall Street Journal got it wrong
Reports from across the blogosphere and from mainstream media this year focused intensely on the perceived war between cable and phone companies for broadband customers (not to mention for telephone and soon possibly video). Today’s The Wall Street Journal examines how “The Price War for Broadband Is Heating Up” jumps to some interesting conclusions about how cable companies are allegedly reacting to DSL’s lowered marketing price points.

Reports from across the blogosphere and from mainstream media this year focused intensely on the perceived war between cable and phone companies for broadband customers (not to mention for telephone and soon possibly video). Today’s The Wall Street Journal examines how “The Price War for Broadband Is Heating Up” jumps to some interesting conclusions about how cable companies are allegedly reacting to DSL’s lowered marketing price points. According to this piece, cable firms like Comcast and Cox are responding to DSL price cuts with low-price promotions in various markets across the country.

Actually the Journal got it wrong. Pricing promotions, such as Cox offering of $24.95 a month for three months in San Diego to new broadband customers, isn’t a reaction to DSL marketing tactics and price points. It’s really Marketing 101, and such offers have been common practice since cable broadband was first introduced in 1996. Many cable companies offer low introductory prices – some even lower than $24.95 – to interest consumers and make a deal on the service in exchange to see if they really value the Internet via cable. As proof of the satisfaction, the Journal accurately reports how cable broadband penetration continues to maintain a wide lead over DSL in the nation.

Cable broadband leads DSL in penetration rates mostly because of the value consumers assign to it. Not only are the speeds significantly faster than DSL, the service also is more ubiquitous and often bundled with cable television or telephone service or both for a total package of discounted services from one company. So while the Journal argues it’s a price war, it’s really a competition for what is the best consumer value. The real question the Journal might want to explore is: why do DSL firms like SBC have to lower their promotional price points twice in less than one year?