• by Gavin O'Malley  @mp_gavin, August 24, 2005

Responding to industry competition, Verizon Communications and Yahoo! said Tuesday they were reducing the cost of their co-branded high-speed Internet service from $29.95 per month to $14.95 per month. The move appears to be an about-face for Verizon, whose CEO, Ivan Seidenberg, reportedly dismissed the suggestion of price cuts as recently as June.

Subscribers to the service get download speeds of up to 768 kilobytes, uploads at 128 kilobytes--the slowest speeds offered by Verizon--along with Yahoo!'s premium services, including antivirus protection, on-demand music videos, and unlimited photo storage.

After SBC Communications--which has a similar broadband partnership with Yahoo!--announced in June that it had cut its monthly high-speed fee to $14.95, Verizon's Seidenberg reportedly said that his company would not follow suit.

SBC transmits data at up to 1.5 megabits per second, twice as fast as Verizon's new low-end service. For comparable speeds, Verizon customers must pay between $19.95 and $37.95.

Yahoo!, which collects a share of monthly subscriber fees from its partnerships with Verizon and SBC, apparently wants nothing to do with the price discrepancies between the two competitors. "We don't get involved with pricing with any of our partners and I want to be very clear about that," said Ken Colgan, vice president of global strategic partnerships at Yahoo! Broadband. "We have nothing to do with pricing."

Most analysts agree that cost significantly affects broadband adoption, and some have data to back it up. JupiterResearch analyst Joe Laszlo recently authored a report which found that falling broadband prices helped propel 8.2 million new households to subscribe to high-speed Internet access last year, bringing the total number of U.S households with broadband to 31.9 million--a 35 percent increase from 2003.

America Online charges more than $20 a month for dial-up. Comcast, a cable company with 22 percent majority share of the market--compared to Verizon's 10 percent--charges about $40 a month, and transmits data at up to 6 megabits per second.