BellSouth has lowered the price of its highest-speed DSL service to $37.95 for 3 MB/s downstream.

The new pricing puts BellSouth’s premium DSL service at a lower price than cable modem offerings from cable competitors Comcast and Cox Communications--although those services are at speeds of up to 6 Mb/s or 8 Mb/s. BellSouth also offers a 6 Mb/s service, for $46 a month.

“We wanted to make it easier for customers to move up to the faster speed,” a BellSouth spokeswoman said. “The price of our FastAccess DSL Ultra, which is 1.5 Mb/s and our most popular service, is $32.95, so now people can move up for only an extra $5 a month.”

BellSouth is also trying to lure new customers to its DSL offering with the promise of a $50 Visa gift card to anyone who orders FastAccess DSL Ultra, FastAccess DSL Xtreme or FastAccess DSL Xtreme 6.0.

The move is the latest round of price cuts and promotions from phone companies, as they chip away at what once was a two-to-one advantage for the cable industry in selling broadband. According to Clifford Holiday, analyst with Information Gatekeepers, the telcos had cut that lead to a 57% to 43% advantage by the end of 2005, based on expected fourth-quarter numbers, and could overtake the cable industry as early as 2006.

BellSouth’s focus has been on developing a portfolio of services that meet a variety of customer needs, the spokeswoman said.

“With our whole portfolio, we think we have the most comprehensive set of services and our prices are very competitive, especially for our markets,” she said.