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The mounting cost of DSL
By Peg Monahan, BuyerZone.com Content Manager
May 22, 2001

Following on the heels of SBC Communications and Earthlink, Verizon Communications and AT&T Broadband, two of the largest high-speed Internet access providers, have announced DSL price increases this month. This move is prompting analysts to predict that other broadband companies selling DSL, satellite, and cable services will quickly boost their rates as well.

Verizon is bumping its basic DSL broadband Internet access up from $39.95 per month to $49.95, retroactively effective May 1 for all states except California and New Jersey. Verizon's DSL rates in California increased retroactively on May 6, and in New Jersey, they will take effect on an as yet undetermined date this fall.

Verizon's packages tailored for small businesses include four e-mail accounts, 10 MB of server space, and 10 MB of e-mail storage. The introductory package ($49.95 per month for one line, up from $39.95) supports download speeds of 768 kbps and upload speeds of 128 kbps, and the new professional package ($79.95 a month for one line) offers download speeds up to 1.5 mbps and upload speeds of 384 kbps.

AT&T is raising its rates for AT&T@Home and AT&T Road Runner customers as of June 1. Basic service will go up $6, costing $45.95 monthly per line for customers who lease modems from AT&T, and fees for modem owners will increase from $29.95 to $35.95. AT&T's packages feature multiple e-mail accounts, customized Web content, and personal Web page hosting.

"DSL providers have had such difficulty getting their product to market in a timely, efficient, and cost-effective manner that they haven't been able to sign up as many subscribers as they initially predicted," says Iris Ranesco, senior analyst with Yankee Group. "That's one reason why the cost is going up. Another is this: With so many of the smaller providers folding, there is less competition against the big companies. Competition is what keeps prices down."

The prospect of spiraling prices is a bleak one for small businesses that view DSL as a relatively inexpensive alternative to the high-speed Internet connections larger businesses can afford, and yet Ranesco estimates that 75 percent of small businesses will utilize DSL for Internet access by June of 2002.

Although there's not much you can do to control what providers charge for service, you can minimize your total outlay for access with these tips:

Install it yourself. All the major DSL providers offer self-installation kits that will save you up to $100 in installation fees.

Consider bundling services. Telephone companies providing DSL service will often waive your setup fee if you order a DSL package in combination with phone bundles, including call waiting, three-way calling, and voice mail.

Think cable. High-speed cable broadband prices have remained relatively flat, averaging $39.95 per month per line, including a modem lease. Bundling cable Internet access with your cable television package can bring the monthly rate down even further, so if DSL is just too prohibitive in cost, cable might be a better choice for you.

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