Verizon's recent price cuts have created sharp rifts between analysts; some believing a price war is inevitable, others suggesting the move is simply sound and fury, signifying nothing. Regardless of your opinion of their product, it's been an impressive few weeks for Verizon, their maneuvers showing other providers, who are worrying about content while covered in mud in the broadband ditch, how to gain the market's undivided attention.

The clever move on Verizon's part to let their speed increase/price cuts leak out to the public while staying dead quiet on the PR front (most requests for comment by the media were ignored) had our forums quickly buzzing with thrilled Verizon customers. Broadband subscribers have grown used to speed reductions, bit caps, and price hikes; "unlimited" service with limits, and threatening letters about bandwidth abuse; so any reversal of that trend or good news, however slight, is naturally met with great enthusiasm.

Customers under 12,000 feet from their CO quickly discovered that with a simple phone call, they could be upgraded to 1.5/128 and actually wind up paying less for it. Veriations bundle customers who qualified could now get the 1.5Mbps package for $29.95 a month. Customers were thrilled, and the news sent a shiver through cable stocks, while analysts began muttering the phrase "price war" on every street corner.

Only yesterday did Verizon officially announce the speed increase/price cuts, after likely watching the resulting press carnage from their PR widow's walk with glee.

SBC joined the party when analysts reported the company would soon be offering a cut-rate $25 a month "semi-fast" 384Kbps (SBC already offered 1.5Mbps speeds). This in turn sent analysts a flutter predicting serious problems for AOL, whose dial-up services were in the same price range...and the ball kept rolling.

Cable executives went into damage control mode, and it wasn't long before Comcast CEO Brian Roberts was in the public eye deriding DSL as an inferior product (see his comments about DSL being "less robust") and not necessarily even legitimate competition. Cablevision and Cox, also posting decent numbers, joined in with their own efforts to make Verizon's moves seem unimportant.

So how important is Verizon's recent maneuvering, really?

"We do not expect to see any immediate impact on the cable modem business -- in terms of market share or pricing," opined Smith Barney analyst Niraj Gupta, in a recent research note dissecting the move. "We do not expect cable MSOs to suffer any pricing degradation in 2003 and we expect cable to capture the overwhelming majority of new high-speed Internet subscribers this year." Speaking more bluntly to the Washington Post, Gupta stated: "We don't think there is going to be a price war."

According to DSL Prime's Dave Burstein, the 'shock and awe'© produced by the price cuts are somewhat misleading, and much of the subsequent press reports are uninformed. "Prices have been creeping down since SBC went to $35 (with conditions) last November. The real drop is more like 15%, and just puts Verizon where SBC went to (for 12 month signup) 3 months ago."

Regardless if SBC led the charge, or if cable really should be concerned about the telco's strategy, Verizon has been engaged in an intelligent round of tactical competitive warfare. The company's price reductions were made all the more potent yesterday with their announcements that they'd be offering free Wi-Fi access to Verizon On-line customers beginning with midtown Manhattan, and the introduction of their MSN cobranded service. To top it all off, the company will be launching a DSL advertising blitz to tie the whole package up with a James Earl Jones size bow.

DSL is dominating the global broadband market, but trailing here in the States; cable wooing more customers daily with their digital programming bundles. With cable VOIP looming over the telcos, and baby bell dreams of offering video services essentially stagnant (while cable companies begin rolling out DVR bundles), any moves are motivated primarily by fear.

Price war or not, it's clear Verizon won't be napping during broadband's infusion into the American bloodstream, but it remains to be seen if they can erode cable's considerable lead.