• by March 6, 2006

The price of broadband Internet service is going down, thanks to price wars between telco and cable TV providers. According to Leichtman Research Group, 2005 was the first year that telephone companies added more broadband Internet subscribers than cable TV providers did.

Leichtman's research found that DSL providers, which are offering broadband service for as little as $13 a month, added 5.2 million subscribers in 2005. Cable companies added 4.4 million high-speed Internet subscribers last year, for a total of 24.3 million. Cable still held the lead over telco providers' DSL service, which registered 18.5 million customers.

The research represents the 20 largest broadband companies in the United States, with 42.8 million total subscribers and about 94 percent of the market. Yet Leichtman estimates that nearly 35 million people still use dial-up access--much to the chagrin of AOL and other providers that are trying hard to get these slowpokes to upgrade.

Prices for low-end and introductory DSL services were slashed in half last year, as SBC Communications, now AT&T Inc., introduced a one-year plan for $15 a month. That plan was quickly matched by Verizon.

The price wars continue. Only last month, AT&T introduced a one-year DSL contract for $13 a month. When that contract runs out, the price jumps to $30 a month. Cable companies typically charge $35 a month and more for broadband service. Service offered through cable providers typically provides higher download speeds than DSL providers.

The biggest cable broadband providers in 2005 were Comcast Corp., with 8.5 million, while Time Warner Cable had 4.8 million. Among the telcos, AT&T had 6.9 million broadband subscribers and Verizon had 5.1 million, which includes a small number of fiber-optic connections in addition to DSL.