• by Gavin O'Malley , Staff Writer @mp_gavin, June 9, 2005

I damn near had mint mochaccino coming out of my nose the other morning when a Verizon insert dropped from the Times and into my lap. "Verizon Online DSL - $29.95 vs. Optimum Online - $44.95," it announced above a silhouette of some cowboy dude holding a power plug by his hip and asking, "Who will be the last one standing?" "What nonsense!" I thought, "them picking a fight with the highest priced provider in the business." Had Verizon missed the memo about rival SBC cutting its own monthly broadband service from $19.95 to $14.95, or had they just decided to ignore it?

Alright, I figured, the ill-advised pseudo-western marketing effort was obviously planned before SBC's announcement late last week. But then, later that day, Ivan Seidenberg, Verizon's CEO, went out of his way to tell a crowd gathered at the Supercomm trade show in Chicago that he had no intention of lowering the price of Verizon's DSL service. At that point it was all I could do to keep the mint mocha from repeating on me.

"We already offer broadband cheaper than cable," Seidenberg postured. "So I fail to see the need to do anything on pricing. We also have a replacement product, so I fail to see the need to discount our existing product when we have a new product that is superior to what cable offers. I think we're on a good course." Well then.

Now, in Verizon's defense, the company only controls about 10 percent of the broadband market. No, but seriously folks, AOL is still charging more than $20 a month for dial-up, and Comcast, with its 22 percent majority share of the market, charges about $40 a month. Plus, it should be noted that SBC's bargain-basement rate is only temporary and is an admitted ploy to undercut its rivals.

Though that still doesn't excuse the refusal of market leaders like Seidenberg to even entertain the prospect of price reductions. I mean, come on. Any industry wonk will tell you that a key barrier to the growth of online marketing is broadband adoption, and prohibitive fees influence adoption rates more that anything else.

I spoke with Joe Laszlo last week, JupiterResearch analyst and author of a new 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. Not bad, but that still leaves more than 50 percent of U.S. households waiting for rates to decrease beyond Verizon's $29.95 before they connect.

Never mind (for the moment) that Verizon is fleecing its cell phone using broadband customers who have to pay hundreds of dollars more a year for a landline connection they never use. Forget (for now) the fact that Verizon, along with other telecoms, are doing everything in their power to prevent local municipalities from establishing their own broadband networks. The formative issue is, has been, and will continue to be cost, until providers smarten up and get aggressive. SBC made the first move last week. Who will be next? Rather, who will be last? Surely not the last one standing.