Broadband Price Wars Loom Large

The Wall Street Journal reports that SBC, the nation’s second-largest phone company, plans to start charging $14.95 a month for new customers — making broadband service less expensive than some dial-up plans.

Is this a loss-leader or a portent of things to come?  If SBC is just torturing their competition to create churn, this is not really a newsworthy event.  However, if this is a vanward strategic shift, the industry is in for a wild ride.

There are miles of dark fiber waiting to be lit up.  There are dozens of CDN’s vying for profitability.  There are hundreds of independent ISPs trying to make a living and now, for the first time, margins are so thin there’s just no where to go.

Let’s think about a world with practically free broadband access … or let’s not.  How about the following thought: 1.5MB down and 384k up for almost free gets you excellent web browsing — but you’ll need about 20MB down to have a couple of High Definition (HD) television sets, a couple of Voice Over IP (VoIP) telephone lines and a free-flowing, broadband Internet connection.  How much will we be charged for the bundle? 

Many pundits predicted that this particular technology fight was going to be the fiercest ever … well, the first shot has been fired.