Comcast Corp. fired the latest shot in the battle this week by announcing plans to boost the speed of its entry-level cable broadband service to 6 megabits per second — as much as four times faster than a typical DSL connection over a phone line.
That move follows a series of promotions which have lowered introductory rates for a high-speed Internet line to between $15 and $30 a month, down from the typical $30 and $45 a month.
The prize is far larger than signing up more high-speed Internet users, analysts say. Companies are trying to lock in customers who may soon be offered the convenience of buying phone, cable, Internet and wireless services from a single provider out of convenience.
Two of the big regional phone companies, Verizon Communications Inc. and SBC Communications Inc., are spending billions to replace their copper lines with fiber-optic cables that provide enough capacity to deliver hundreds of channels of cable TV starting later this year.
The cable companies, meanwhile, are rolling out phone service over their cable lines and exploring options to add cell phones to their mix.
In advance of this head-to-head competition, Verizon, SBC and Qwest Communications International Inc. recently cut their introductory rates for DSL to $15 or $20 per month, and the cable carriers Comcast, Time Warner Inc. and Charter Communications Inc. sweetened their introductory prices to $20 to $30 per month.
The phone companies are especially "willing to take a hit on margins ... if they can keep their landline users," said Mike Paxton, a senior analyst at In-Stat, a technology research firm in Scottsdale, Ariz.