Price War Erupts For High-Speed Internet Service

The battle between cable and phone companies to sign up new customers for high-speed Internet service is heating up, creating fresh opportunities for consumers to cut their bills. While the most generous offers are coming from the phone companies, some analysts expect cable companies will also become more aggressive in their own promotions as they compete to retain customers. Cable and phone companies have competed for broadband customers for more than a decade, but discounts have been relatively modest, mainly because the companies continued to add new customers at a healthy clip. Now the market is maturing quickly; some 60% of U.S. households currently have a high-speed Internet connection. Cable and phone companies added 887,000 new broadband customers during the second quarter -- half the number they added a year earlier, according to research from Leichtman Research Group. And while the new additions were long split roughly evenly between the two camps, the tide turned dramatically in cable's favor for the first time during the last quarter. Cable companies picked up 75% of the new customers, sending the phone companies into a scramble. As bandwidth-hungry applications like video downloads grow, customers prefer the generally faster speeds cable offers. Cable companies have also been marketing more aggressively in recent months, analysts say.