Report: Broadband Too Expensive For Many 554
An anonymous submitter writes "This AP article, citing a study from the U.S. Commerce Department, reports that "Almost all U.S. families live in areas where a high-speed Internet connection is available, but many see no compelling reason to pay extra for it." The article mentions a survey that found that "more than 70 percent of dial-up users cited cost as the main reason they aren't upgrading to faster access."" It's much like digital cable - the cable networks ratch up the price for...music channels? But broadband is a chicken - egg problem. You won't get people signing up until they see a reason, and you won't get compelling reasons until more people have signed up.
Chicken and egg my ass (Score:2, Insightful)
I have DSL, and I'd pay whatever they ask for it, but not everyone can do that.
Uh, we're geeks. (Score:4, Insightful)
It's like people who have three or four cars in the driveway that they enjoy tinkering with as a hobby - my mom drives a Taurus to get groceries and go to work, and that's all she needs. Just like all she needs for internet access is a couple of five minute dialup connections every week to check her email.
--saint
Statistics are valid for whom? (Score:2, Insightful)
Comment removed (Score:5, Insightful)
That's why Europe is ahead (Score:5, Insightful)
It's funny how it's the little things that can mean a big difference. In this case not having unmetered local phone access (in general). Now, it's not that I enjoy having to pay for local phone calls, far from it, but it has driven the cost argument the other way. In my case it's significantly cheaper to pay $30/month for unmetered cable internet access, than staying with metered modem calls.
If I were in the US I honestly couldn't say whether I'd have moved from dial up, with less of an economic incentive. It's not so much the bandwidth, as not feeling you're on the clock when you're on-line.
It's really the same as with mobile phones. Since the US chose to keep the mobile phones within the existing number structure, i.e you cannot tell whether you're calling a mobile or a fixed line, and since customers expect unmetered local calls, then the subscriber had to pay for incoming calls, which lead to less willingness to give out your phone number, which lead to the uncommon situation of Europe getting a lead over the US in a matter of driving technology adaption.
IMHO this is the one difference that has made GSM a success where US mobile solutions have lagged. It's still an open question whether that will stay true, or if by an ironic twist of fate, 3G will do us in, while late adoption in the US will position you guys better in the next 10-20 years.
It's cost, not content (Score:5, Insightful)
Don't be fooled, I think there is a huge demand for broadband (although for mostly underground reasons) - but every article I read about it tries to spin it towards supporting the RIAA/MPAA demands for DRM. They say "no one has broadband because they're waiting for OUR stuff," but in reality most people just aren't going to pay $50 a month for broadband. I don't think they're waiting for MPAA-blessed DRM (so they can pay EVEN MORE for pay-per-download schemes) - they're waiting for affordable broadband.
I'd pay $20 a month for something above 56k but below Cable/DSL, but such a thing doesn't exist, so I'll just wait until broadband is affordable.
sheephead
Definately the case ... (Score:2, Insightful)
I asked a couple other customers what they thought would be a reasonable price
Like it is stated above, most of these people might consider paying more if they new just how much faster broadband is versus a dial-up (especially AOL), but I doubt they'd be willing to pay more than $35/mo.
I think this problem is pretty simple
Time Warner usually offers a 3 - 6 month trial offer for RoadRuner broadband in the Ohio area for 1/2 the normal price (about $25-$30/mo) in an effort to get people addicted to RoadRunner. THis is a great idea, except what most people do is disconnect after 6 months
Bottom line: Most people don't need boradband for what they do on the Internet
Maybe if the broadband compaines lowered their rates to $30/mo (only 2x dial-up instead of 3x to 4x)
I know my old boss was reselling 1/2 of a T-1 to over 400 dial up customers for $12/mo
$12 * 400 = $4,800 - $500 for 1/2 T-1 = $4,300 profit!
(*hits self in head for not starting up own ISP 3 years ago when the opportunity was there*)
Gotta wonder what Time Warner is making????
Profit maximizing (Score:5, Insightful)
Set the price too high and of course no one signs up. Lower it like we'd all prefer, and not only is the impact on revenue marginal, but you incur costs in support and infrastructure to deal with the additional traffic on the network. Set the price at a point where it's reasonable to many users who just have to have that pipe, a little too high for many more, and which makes decent use of the network without bogging you down in support costs, and you've found your profit maximizing point.
That is a natural consequence of monopoly/oligopoly. So long as the last-mile connection is in relatively few hands and not subject to much competition, profit maximization will be the goal and not signing up new customers.
Re:Broadband cost (Score:3, Insightful)
dino and the egg (Score:2, Insightful)
Not to mention the two major players here in Canada have now put limits on your 'free' DL. Anything above and beyond you pay for. So we are back to the dino and the egg. Content providers won't put up large file size pages because not enough people have Cable or DSL, and people won't shell out for anything above and beyond what is included with their base rate. Can you imagine having to pay extra to view
It will be so much fun in a year or two to watch the big providers hop around now that they have shot themselves in the foot.
Too expensive? Sure. (Score:4, Insightful)
Broadband isn't a priority for them. If it were a priority, people would find the money, just as I always have.
Things will always be too expensive for those who don't have a need for them, until they're dirt-cheap. Until cable hits the price of AOL, most people will find it too expensive. And there will, after that, still be people who don't want to give up their handy-dandy AOL features.
Public Access Channels (Score:3, Insightful)
I have wondered for a while now, if localized networks where the ISP provides hi-bandwidth content and advertising and easy automation with the local community, might be worthwhile.
This would allow for 2 things. Hi-bandwidth providers with less cost (it costs alot to stream hi-bandwidth to the whole internet). Localized Intranets for regionalized content (how many times have you used google to find the site for a local business?).
Perhaps this could provide part of the egg for the chicken and egg problem. A sort of "public access network".
It's the price (Score:2, Insightful)
Let's see, the modern connected household needs to cough up:
$30 a month for phone
$30+ a month for cable or dish
$30+ a month for a cellphone
and $30 a month for DSL or cable internet
I have hi-speed access at work, so I can do any big downloads there, and the 56k at home is just fine for email, browsing or modest downloads of under 5 MB.
The price needs to drop before high-bandwidth is a no-brainer for the average person.
But it is a better value (Score:3, Insightful)
It's easy to show it as a better value than dial up, especially if you factor in the time saved not having to wait for pages to transmit and display.
The enabling of multimedia online is really just gravy.
Re:public responds: DUH! (Score:3, Insightful)
What you mean is "internet access is only worth $9.95/mo to most people" which isn't the same thing at all. Because they evidently do have money to spend on other things, the only question is, what will cause the internet to be more valuable to these people? Work that out, and you've solved the problem.
and until it passes from the realm of Luxury to somthing that is absolutely needed... it will retain the luxury level pricing...
It doesn't work like that. Is good quality toilet paper a luxury or a necessity? Maybe it's a luxury, but people are happy to pay for it. Toast is a luxury if you've got bread, but people still happily buy toasters (one friend of mine even calls bread "raw toast"). What I'd saying is, things that aren't technically necessary for the maintenance of life still count as necessities to many people.
At such time as broadband actually becomes useful, it will become widespread. At the moment it isn't because there isn't much practical use for it, i.e., insuffient compelling content.
Re:Good (Score:2, Insightful)
For those of us who market the bandwidth, create the games, and raise children to be technically savvy and responsible adults, You're Joe Sixpack.
Keep warping those priorities, son; baby needs a new pair of shoes...
Re:And the RIAA still blames broadband and p2p! (Score:3, Insightful)
Note to Telecommunications industry: Your companies stocks are in the dumpster because the RIAA was more greedy about their profits and didn't give a shit whether telecommunications companies lived or died.
The best way to broadband from cable.. (Score:2, Insightful)
Heck, I'm paying about US$25/month for my broadband connection and they just came out with a "lite" service for US$17/month (light = ~96-128Kb connection). I mean come on, this is cheaper than some dial-up services out there!
Really the real problem (Score:5, Insightful)
Unfortunately we have current business trying to deploy broadband, and figure out how to make money from it in the context of their current business models. Hence Adelphia has this black cable coming into my house, and feeds me both TV and Internet over it. Now if I've already got TV/movies coming over that cable, and the TV/movie is seldom worth watching, why-oh-why do I want to turn my Internet into an alternative TV/movie distribution medium?
The real value of broadband is going to be in things that don't happen over other means, or at least where broadband makes them happen markedly cheaper/better. Two things pop up immediately, network gaming and filesharing. For both of these, the Internet is a unique piece of plumbing, and broadband Internet gives true enablement.
Of course, filesharing currently seems to be criminalized, but that's not necessarily true. That's largely because ??AA business models haven't adapted. In that respect, the IMHO ??AA business model (artificial scarcity) is the greatest impediment to widespread broadband. Coming up with another business model that works in this environment and allows artists/publishers to make a reasonable ROI is another issue, but it needs exploration. Unfortunately the current route being taken by the ??AA may well attempt to deny that exploration.
There's another ramification, in that the ??AA business model and current (especially cable, which is highly tied into the MPAA) broadband service is not friendly toward peer-to-peer, which is really desirable for gaming. Sure, there are the big game servers, but it would also be highly desirable for a few kids to get together on their own. From a parental point of view direct connect between my kids and their friends is preferableover a big gameserver, too.
Back in the early days of telecomputing, there were outfits like The Source, CompuServe, Genie, and the like. Those that survived realized that their users really wanted to get in touch with each other. Maybe they started out serving informaton, but either they wound up serving connectivity, or they died. Just about the entire industry seems to have forgotten that lesson, and is trying its hardest to turn the Internet from connectivity into information. *Their* information, for a price, preferably paid *every* time. Precisely the model that failed decades before.
So until someone gets a clue, and figures out that broadband will enable new markets rather than old, and begins to explore those new markets, I don't see much change. Alternatively, by dropping the cost significantly, it's just better than dialup, which others have mentioned.
NOT a chicken-and-egg problem (Score:3, Insightful)
People buy CDs, DVDs, tapes, and videocassettes because they want the freedom to do a lot of things with that material. They want watch/listen to the material as many times as they want to, whenever they want to. They want to use whatever media they have to watch/listen to it themselves (e.g., be able to copy CDs to their personal tapes so they can hear the CD on a tape deck, create their own CD mix, create an MP3 so they can hear music on their laptop while leaving the CD-ROM drive free for something else). They want to avoid the risk of extra fees and possible loss (assuming their houses aren't physically damaged). They want to do many other things with it, too, and as long as it's only for their personal use, they need to have the freedom to do so.
Instead, many of the current electronic distribution techniques for music and videos have extremely consumer-hostile policies. For example, many of the current RICO approaches want you to pay monthly subscriptions, with no additional services and no guarantee of a stable price (I think we can safely assume that if these approaches caught on, the cost would ramp up steeply). Since the legal online distribution system is WORSE for the consumer than the alternatives, few consumers want it.
Of course, if the music/video overlords will not provide their content reasonably over the Internet, what's left for the Internet to legitimately do? There are lots of other useful services on the Internet: email, web surfing, and so on. It would be NICE to have higher bandwidth for that, but clearly most people believe it's not worth the extra money and trouble. Obviously, things vary, but it IS more money in many places - not everyone pays AOL price$ for an ISP, and broadband is outrageously expensive in many places.
Now I'm sure others here will disagree with me, but Napster-like systems of mass sharing are wrong. RIAA vs. Napster was simply the case of two evils pitted against each other. RIAA is very hostile to artists, really (the represent music publishers, not artists), but Napster was even worse. However, the growth of Napster and P2P systems is really an evidence that the current publishers "don't get it," and that is the real problem.
The fundamental problem is that the music and video industry, instead of embracing a technology that could make them a ton of money, are sticking their heads in the sand and trying to uninvent technology instead. Trying to invent totally "non-copying" systems results in incredibly invasive and privacy-destroying systems which don't really work. Trying to make digital media uncopying is, as Bruce S. notes, like trying to make water not wet, and someone with a videocamera aimed at a screen can undo lots of fancy mechanisms. But even worse, such systems fundamentally subvert "fair use": copyright law is a grant to authors, under the condition that they permit fair use; if fair use is taken away, then clearly those organizations should forfeit copyright protection as well.
A simple watermarking scheme that deals with the casual pirate would be better; it would permit fair use, and deal with piracy as under current law. The non-casual pirates are already creating copies, and will continue to do so regardless of the Digital Restrictions Management (DRM) techniques used. It would be better to use the technology available to make it impossible for the pirates to compete, by providing a legitimate service that customers actually want to use. That means charging less for the material (you'll still make more money, since many overheads disappear and people can impulse buy more quickly), and making it trivial to obtain the material.
Of course, since the publishers essentially own the souls of most artists, if publishers will not release their material under consumer-friendly terms, they obviously can do so. But that will just mean what's already happening: consumers will not use their elecronic distribution mechanisms. Unsigned artists are already making their material available in other ways; it's conceivable that eventually most material will be released by artists instead of the current publishers, at which points the publishers suddenly discover they're irrelevant. It's unclear that this will happen, but it's a possibility. I rather hope it does; it would serve these companies right for ignoring their customers.
My two cents.
All compelling uses illegal? (Score:3, Insightful)
However, we still have tens of thousands of music channels at our fingertips online... legally. Go to www.live365.com if you don't believe me. There are still many, many short film sites up and running. And Broadband gaming is as accessible in this country as it is in the others, with games such as Evercrack, AC, and the upcoming Star Wars Galaxies just waiting to suck up every moment of your life.
What we don't have is a technically savy population that knows these things exist. We don't have a population that bothers to ask what options come with their cell phone plan, let alone what protocol the company is using. We don't have a population that is interested in the latest water-cooled notebooks. We don't have a population that competes with eachother based on the size of their PDA. And, sadly, we don't have a population that was first exposed to the available uses of the internet at communal high-speed net cafes.
If we did, we would realize that speeding up regular web access is bloody satisfying enough to warrant the output, let alone actually having a phone again. And if that wasn't enough, we would realize that such things as multiple 24 hour Tango channels, independent films on demand, etc. etc were available and desirable. For that matter, we would put more stock in independent music and film, rather than just seeking out the rehashed trash hollywood keeps programming us to want then getting upset when we find our own ways of getting it.
High-speed (actually, it's just adequate speed) access IS worth it... the problem isn't a lack of programming but a lack of knowledge on the part of the people. If you really expose people to broadband, and show them all of the wonderful legal uses, they really won't go back.
Difference between Europe and US in a Nutshell (Score:2, Insightful)
Europe is still socialist enough that they tend to favor building infrastructure. The US is so individual oriented that the government believes in tax reduction, rather than build infrastructure. Seems the last time the US ever really did anything was build the Interstate Highway System, which now has us bound to our cars. Too bad rail travel isn't what it was up to the 50's, I'd hardly need to spend $20,000 + gas + insurance + maintenance.
Re:Too expensive? Sure. (Score:4, Insightful)
The items you listed above each represent some sort of value that the consumer perceives. The cell phone may include free long-distance. The cable is a marked improvement in selection over what is available over the air. Cars are, well, cars. They are status symbols as well as functional things (my Accord has 183,000 iles -- I'm not after style points, but I understand some are so motivated).
Broadband does not, for most people, represent a valuable thing to many people (though the cost of AOL + a dedicated line is not much cheaper where I live). I have a need to downloan ISO files, remotely administer servers, etc. Most people just check their mail and chat. Until ANSI gets grossly larger, narrowband will work fine. Even most web pages are ok -- it isn't really useful to present more than a certain amount of written information on a screen at one time. Pictures likewise are usable enough that I don't see great leaps forward as being more than marginally beneficial.
Some great holy grail of interactive multimedia has always been made out to be the Holy Grail of various kinds of broadband, whether it be movies on demand or interactive TV or something. I think those are red herrings.
Also, watching moving pictures and reading text simultaneously don't really work well together from a biological visual perspective. Try watching the action (talking heads) on CNBC and reading the ticker symbols scrolling at the bottom. It won't work -- we're just not wired that way.
Unless you need to move big files or want to run servers, broadband to the home isn't really a big deal. There is no need.
Technology proponents have to be careful sometimes. There's an enormous "build it and they will come" idea that is just plain wrong. You build it for the people who want it and who are willing to pay premium prices for it, and then you lower prices and add features until it becomes mass market. If the latter doesn't happen, you have a niche product.
One problem is that broadband is a network, and it requires more users to me more useful. There's no way 25 million people today would pay $25.00 a month to connect to an internet of say, 1995.
The only real use I see as being likely to drive broadband today (things will change in the future, as always) is connecting home offices to corporate networks. Businesses will pay for useful services and broadband is one of these for businesses. Companies can lower travel costs and increase productivity with remote employee offices. Telecommuting as a way of life is something I see more people doing, and the ability to do it with broadband vs. narrowband is exponentially better.
In short, my critique of the article is that broadband is not too expensive, it is just that there is no use for it. Who is to say whether a 40-ton dumptruck is too expensive because it isn't being adopted by consumers? Broadband, while nifty and neat-o, simply is not competing effectively for increasingly precious discretionary spending dollars in consumer households.
I am not the least bit surprised.
guac-foo
Who Cares?.... (Score:4, Insightful)
I also keep seeing this statement about the "chicken and egg" problem of broadband, but nobody has explained precisely WHY it's a problem. What new content is going to magicly be available? What compelling reason could our Congress or even your city council have for getting you on the net faster. They work for you and should be FOLLOWING your wishes, not trying to ram broadband down the public's throat.
Perhaps people are happy enough with what they've got! The option of moving up to broadband is always out there, there's simply no reason for most.....why is that a problem?
The industry wants to get everyone hooked up and locked into big monthly bills....remember the AT&T comment (here previously on slashdot)about the targeted $300/month bill. This "get everyone on broadband" thing is ASTROTURF by the media players....
If you buy into the current "broadband" push, it will only be a one-way stream. Starting at RIAA/MPAA headquarters and ending at your wallet! This push for "broadband" by Congress is NOT about getting more choice, it's about building Hollywood's pipes at taxpayer expense.
I'm really not too interested in seeing "digital convergance" either if it means that I've got to live with Paladium and turn my computer into a worthless "set-top box"....that I'm going to have to keep replacing every time MS comes out with a new version of "Windows Set-Top-Box edition"...
We should stop worrying about how many people adopt broadband...it's their own business. It certainly doesn't warrent the government or anyone else getting involved. Perhaps we should just let the marketplace figure this one out on it's own....
Lack of competition perhaps? (Score:5, Insightful)
Quoth the article:
On the other hand, relatively few U.S. families live in areas where there is competition for high-speed Internet access. Even fewer have competition beyond their single cable modem provider and their single DSL provider.
Cable companies and phone companies have fought like mad to protect their monopolies and their investments are now paying off. High-speed internet access is unlikely to to see big growth until customer have real choices, encouraging lower prices and higher quality service.
Pervasive dialup is good for the Internet (Score:4, Insightful)
The other thing that's good about dialup is that it keeps America Online strong while they finish perfecting their broadband business model. Say what you want about America Online, but they're the largest obstacle preventing Microsoft from completely taking over the Internet. If AOL finishes moving its users over to Mozilla in a timely manner, it'll prevent Microsoft from burying non-IE browsers. It's easy to imagine Microsoft dropping JavaScript, for example. And what about those
Dialup helps AOL and AOL helps the non-Microsoft world survive. These are fundamental truths.
Publishing (Score:2, Insightful)
The corporate discovery of the Internet, combined with the systematic stifling of the ability of the individual to publish, leaves us with a lower content-to-fluff ratio. That's what will keep people from paying more for high-speed Internet.
On a related note, given a content-heavy, well-designed Internet, what matters most, most of the time, is latency -- not bandwidth. Many broadband providers are selling connections with latency much worse than an analog modem, and prevaricating left and right about the wonders of bandwidth. Granted, this assumes that the web, and textual content is more valuable than downloaded pr0n, but the Internet is still a pretty poor mechanism for delivering music and video, as I think it will be for a long time to come.
To reiterate, the real value of the Internet is in the availability of two-way communication -- the empowerment of the individual to have a voice that is as visible and strong as that of a company with many more resources. It is the stifling of this that will be the broadband companies' downfall.
Re:channel surfing (Score:3, Insightful)
That has absolutely nothing to do with it. The channel ID overlay can be drawn in a single frame (1/30th second).
The delay is because the digital signal requires additional decoding - and in order to see the picture at all you have to receive an I-frame which can take up to a full second if you just missed the last one (most systems do start displaying partial data, but that's why you see MPEG blocking artifacts until an I-frame is received).
They also grab info like the show name, channel name, etc. from sideband data -- none of which is available on analog cable.
If I am looking for a soccer game, or a cooking show, the funky menu systems are actually much slower
Or you could learn how to actually use new technology -- like menus. Instead of channel surfing by pressing chan up/down, you bring up the menu and see what's on now, what's on soon, and even descriptions of the shows if available.
This is an advantage.
Yes, there are times I find myself going back to channel surfing in the traditional sense, but I quickly remember just how stupid and painful it is to do so. Pull up a channel guide, find the channel or show I want, and go to it.
Of course, even more often I just hit the TiVo button and play something I've recorded in the past few months.
More than Just Faster (Score:2, Insightful)
broadband access not to expensive (Score:1, Insightful)
1. They don't know about it and think dial up access is the internet.
2. They don't wanna switch even if it might save them some money since they got a second line plus dial up access and the big hassle of cancelling the 2 seems too much for them.
3. They're a die hard dial up user and will refuse to switch even if its only 5 dollars more per month.
4. They think that a faster connection should cost the same, no matter how hard you try to tell them it costs the companies more money to serve up broadband access then dial up.
5. They got aol and would rather have aol's ease of use plus problems then a faster connection.
6. They just ignore the times that they can't dial in to connect.
7. And my favourite, their computers are setup to automatically dial in soon as they open up their browsers so they still think its an always on connection, despite not being one.
Now here if people who were on dial up were aware of the prices of broadband access compared to dial up, it would be cheaper then trying to use dial up and having a second phone line to try to imitate broadband.
As for digital cable which the convo here has swayed to, I love digital cable. So what if the channels take 2-3 seconds to show up, that's why they include a tv guide that you can view and choose what to watch. And here's a hint for clear picture and sound, go buy some audio/video cable, and hook up the set top box to output the audio/video to your tv. You'll notice a difference then.
Re:Uh, we're geeks. (Score:1, Insightful)
The car tinkerers support a multi-billion dollar customization industry, from your old classic cars, to your 70s favorites, to your present day foreign and domestic street rodders. They cater products to those in the know who want performance or want to know more themselves.
I would say the broadband companies just don't get it. They have no pricing for value added services.
I've got 1.1mbit/128kbps cable modem service. There is no option for a supported static IP. No option to uncap my upload speed. No option to allow me to serve. 1.1mbit download is fine, but I really don't need it that fast. I'd rather have 128kpbs upped quite a bit.
Parents use 56k. Would love to get broadband, but they don't need 1.1/128. They need like 300kbps/90kbps. They'd pay $20-30 for that, as they already pay the typical $20+ for dialup and a separate telephone line. If the companies want to get broadband to the masses, lower price, and, to start, lower the bandwidth. Most people want the convenience of always on, but most don't need the speed.
Meanwhile, make offerings to the hot rodders, the geeks. I pay $45 a month, including cable modem rental. I pay $25 a month for web hosting services (multiple domains). They could be making inroads on those markets. I would gladly pay $100 a month. Why pay the extra $30? Because I want to run the databases on my own server, not worrying about security of my hosting company and minor albeit proprietary information on another machine on another coast. I want to be able to pull a drive now if it dies, or upgrade a cpu. I'd gladly pay more.
Broadband to the home needs to treat themselves like a business, like they want to attract people. Have general plans so people don't get confused (e.g. chart a--if you check email and surf, buy plan a, which is the basic plan) but have options for those that know ($25 for a change in the service agreement so you can serve, $25 for some level of downtime or SLA).
Allow folks in a neighborhood to uncap. I know people with office and houses in the same area, on cable modem service, served by the same headend. They share files at 128kbps. Why??? They'd gladly pay a little more to have this lifted so they could share at like 10baseT (unrealistic probably given the asymmetric bandwidth technology basis of cable modem service).