Using its payphones as hubs, Verizon is set to blanket Manhattan with a WiFi signal and offer the service free to its DSL customers. And this is after cutting the price of DSL to $35.

This is amazing. A telco is competing in the Internet access business on features and price, rather than in the legislatures, regulatory agencies, and central offices. Verizon doesn’t exactly have a history of this kind of behavior, so it’s a refreshing change.

It’s also interesting that Verizon can set up a hotspot in a payphone for $5,000 and 1,000 of these — only $5 million invested — is enough to cover Manhattan. I don’t know Verizon’s margins on DSL, but this should be able to pay for itself in two years if less than 10,000 people sign up for DSL to get access to Verizon’s WiFi network.