How Much Should Broadband Cost? 378
An anonymous reader writes "The difference in cost between broadband options seems to be the primary motivator for consumer spending, reports News.com. Frugal consumers are opting for the lower-priced DSL options, while those with more money to spend on services are opting for cable modems." From the article: "A year-and-a-half ago, pricing of DSL and cable modem service was roughly the same. But over the past year, the phone companies have launched an aggressive assault by dropping prices. At the end of 2005, the average price of DSL service was about $32 per month, roughly $9 less than cable, according to research firm IDC. AT&T has twice lowered the price of its DSL service and now offers its 1.5Mbps service for $12.99 for the first year."
No competition = higher prices in the future (Score:5, Insightful)
In that same vein, I feel that their next step is to start trying to sand-box their corner of the Internet. That way they control the content too. It is no good as a commodity to them, they want to monetize it to a greater extent. The only way in their eyes it to first keep you from going anywhere else, second make it so their content and services are always faster, and better. Look at what some of them do already with VOIP. When my VOIP provider is choppy, and high latency who do I blame? Most customers are not smart enough and blame the VOIP provider.
Remote Admin Tools for Windows [intelliadmin.com]
Re:No competition = higher prices in the future (Score:3, Insightful)
Re:No competition = higher prices in the future (Score:2, Interesting)
Re:No competition = higher prices in the future (Score:3, Interesting)
Wrong... (Score:2, Interesting)
Think about it this way. What are the things you are willing to pay the most for? How about water, for example? It surely is much more important than DSL. Yet you pay pennies for water, even though your willingness to pay is much higher. This is because the COST of providing water is very low, and competi
Re:Wrong... (Score:5, Informative)
whoever taught you your economics, they should be fired.
the price is determined by the desires of the buyers first, with the costs of the sellers a close second.
You cannot market a product nobody wants, or a product everyone wants out of their price range or they dont buy, plain and simple, and thus the market collapses.
Further, if you are not pressured by consumer needs and competition for those needs (e.g. if a monopoly or oligopoly is presently stifling competition) there is no reason to develop greater efficiency and lower those costs. Therefore the consumer suffers, they do not get optimal service for their dollar, and arguably the producer and even the environment suffer, as they are not making efficient use of their inputs.
Re:Wrong... or why Economics of Cable/DSL hard (Score:5, Interesting)
in some markets, we may find that the desires of the buyers are the most significant in determing the price of the service (broadband, considering different flavors/brands/speeds).
in other markets, we may find that the lack of competition amongst competitors (places where the same large corporation owns the cable, wireless, and DSL services or reaches a colluding anti-competitive market agreement in our under-regulated market) means that the price is determined by the sellers and their most efficient return on investment (an example being renters where most apartment buildings are owned by the same conglomerate or are dorm rooms owned by a specific college).
and then other markets may be inbetween these two extremes.
Assuming there isn't a monopoly or oligopoly in our current environment will lead one to inaccurately assume perfect competition, with easy barrier of entry (they may only permit one cable provider or provide barriers to cell towers or land lines for DSL), perfect information (knowing what the current and future rates are and consumers having easy access to information to determine the actual true cost (both teaser rate and lock-in rate and cost/length of service contract and installation/disconnect fees)), and perfect liquidity of capital with sufficient equivalent capital for all consumers.
Such a perfect world (the latter case) doesn't exist anywhere I've seen. Thus, we need to use a better economic model, assuming imperfect information for competitors (no published rates), sticky prices (regulator sets levels), imperfect information for consumers (only teaser rates seen and fine print obscuring full cost so what you think is $15 is really $200 when you install), and high barriers to entry (restrictions on building, long permit schedules, long wait times for new installations, lack of supply for materials to install, shortage of contractors to install, etc).
In other words, you're both right. And you're both wrong.
remember, if you get two or more economists in a room, you'll get a number of different answers equal to the number of economists in the room
(grin)
The OP's hypothesis was a working market (Score:3, Informative)
In real markets, there are distortions which allow sellers to capture extra consumer surplus. However, these distortions are much smaller than many think in most markets. As long as you have more than two or three competing sellers, marginal prices are rapidly approached.
Re:Wrong... or why Economics of Cable/DSL hard (Score:5, Funny)
Only if they are all one-armed economists, so that none can say, "On the other hand...".
No, he's right... (Score:2)
Re:Wrong... (Score:2)
Further, if you are not pressured by consumer needs and competition for those needs (e.g. if a monopoly or oligopoly is presently stifling competition) there is no reason to develop greater efficiency and lower those costs. Therefore the consumer suffers, they do not get optimal service for their dollar, and arguably the producer and even
Re:Wrong... (Score:5, Interesting)
No, actually he's only half right. It's a long aged discussion (177x?) about the differences of intrinsic values. How many pounds of diamonds will you pay for a glass of water? What if you have been in the desert for a week? But without the demand (desert) the product (water) has little perceived value.
The biggest problem with this whole picture is that the market availability of DSL versus Broadband is severely warped and everyone knows it. But we are unable to get the congress-critters to recognize that it's really problem at the consumer level. I can't get DSL for love or money. But I can get this expensive broadband that is only offered by one company. No choices.
I'm becoming a fan of DSL being applied to the United States in the same fashion that the Rural Electification Act was used. It required that EVERY house have electricity. I think it should be required that every house which currently have a phone line also have DSL made available at a consumer price that is consistent. You can't charge the guy with a 12 mile special line $599.99 a month and $9.99 in the big city.
But I don't think this will happen in these times. 10 years ago I was of the opinion that the Federal Government should gaurantee delivery of a TCP/IP connection in the same manner that the US Post Office works. I still am.
Re:Wrong... (Score:2)
Re:Wrong... (Score:2)
The 'water bill' in many places includes sewage and possible other services.
What does a gallon of water cost you?
Re:Wrong... (Score:5, Informative)
Huh? How is there competition in the water market? In most every city, there is a single provider working under a government enforced monopoly. The water market is probably the single most regulated market in the nation.
Also, if the cost of water reflected the costs of providing it, users in Phoenix, AZ would pay more than users in Buffalo, NY. This is currently NOT the case. The fact is, the price of water usually reflects the government subsidies, rather than actual market costs resulting in huge inefficiencies, and excessive depletion of groundwater supplies in many parts of the West.
Re:Wrong... (Score:2)
Re:Wrong... (Score:2)
No such thing. Companies know they can charge more and make more profit, so long as the competition doesn't undercut them, and they do exactly that.
That's only even possibly and remotely true if there is unlimited supply and unlimited competition.
That's because 95%+ of us don't really need to go through a company
Re:Wrong again! (Score:2)
In a real market, the price is determined by the costs of the seller and what the competition is willing to price at.
If gas station sold gas at $1.00 while everyone else was $2.00 and they could do this for at a profit and do it without people having to wait in line for a really long time, then those who refused to lower their prices would go out of business. And it doesn't matter if they sim
econ 101 says price has nothing to do with costs (Score:2)
In a "proper market" price is determined by the point where supply meets demand. Goods and services are sold at the point where supply and demand meet because this is the price point which maximizes their profits. Sure, this assumes that competition is possible and that the markets are very liquid.
Water is a horrible analogy since it typically comes from a non-profit run
Re:No competition = higher prices in the future (Score:5, Informative)
Actually, with perfect competition [wikipedia.org], firms would charge their marginal cost of producing it. The intuition behind this is that if they did not, and there exists free entry (a requirement of perfect competition), then another firm would charge slightly lower, and thus get all of the customers. Of course, in the broadband industry, there exist fairly natural monopolies [wikipedia.org] because of the huge fixed costs of the infrastructure and "last mile" runs.
Now consider what you said: the consumer's willingness to pay. If firms are able to charge as much as each individual is willing to pay, this is perfect price discrimination. DSL and cable operators do some degree of price discrimination by offering the different tiers of speed at different prices. If I understand you correctly, I'm pretty sure having DSL cost what consumers are willing to pay is not what you want. After all, I'd certainly be willing to pay a bit more for my DSL considering how much I use it.
When is the last time you saw a new DSL provider *other* than the phone company?
I am really worried that our options are getting smaller, and not larger - thus the prices will go up, and our bandwidth will not increase with the extra cost.
Yes, in reality, internet service is fairly consolidated. If you're lucky, you'll have three good choices for broadband (many have two -- cable or DSL -- or fewer). Still, in many areas services like Speakeasy [speakeasy.net] are available as alternatives in the DSL market. In my experience, options for broadband are not getting smaller, as you suggest. Some communities or apartment buildings even form their own co-op style internet service providers if they're truly unhappy with the choices. Before, when most people were on dialup, it'd be hard to convince enough of your neighbors to want to start such a service.
As for prices, we're seeing a bidding war. I would expect this to be good for consumers, so long as enough options remain. I haven't seen evidence that DSL or cable operators are selling below cost, as some have claimed. I seem to recall paying about $55/mo 5 years ago for cable internet access (in addition to the TV channels), and now prices are (much) lower and speeds are still good in most areas. The bidding wars don't seem to be driving out players like Speakeasy, so I personally just don't see such a pessimistic trend.
Re:No competition = higher prices in the future (Score:2)
You may pay Speakeasy, but never forget who owns the actual lines. Where I live, there are tons of people who will sell you DSL, but in the end, they all get screwed by the service and support side of Qwest. I know why they didn't participate in the phone records scandal, they were already over their "Customer Cornholing" limit for the decade...
Re:No competition = higher prices in the future (Score:4, Insightful)
Add wireless into the mix and they cease to be natural monopolies. It's way cheaper to point an antenna at a house than to dig a trench to it. This is why telcos are fighting so bitterly and so unethically against muncipal wireless projects.
Thank you, by the way, for what seems to have been the first correct explanation of economics in the comments.
Re: (Score:3, Informative)
More than just competition (Score:2)
I think it should cost just enough that the company can cover the costs of providing the service, maintaining and enchancing their equipment any fairly paying their employees. Any more than that is gouging, even if consumers are willing to pay for it. Incidentally, things costing what consumers are willing to pay is NOT how a "properly working capitalist syste
Re:No competition = higher prices in the future (Score:2)
Earthlink? Speakeasy?
Re:No competition = higher prices in the future (Score:2)
Not all consumers are willing to pay the same. In fact, few will agree on any price. So how many different levels of service do you feel should be available since there's not one theoretical consumer -- but many!
Cable all the way (Score:3, Interesting)
Even though its more expensive than ADSL, W00000t is all I can say!
I prefer my cable because ADSL still appears to dialup and the IP changes every time you sneeze.
The ethernet cable out the back of my machine is designed for super quick data connections and thats exactly what it does.
As an example:
I just downloaded Ubuntu (697.8MB) over http in under 10minutes, ~1200kB per second is nice.
as a FYI for other NTL broadband customers get a cable modem the set top boxes cannot handle 10Mbit (but NTL will be happy to take your money anyway).
Re:Cable all the way (Score:2, Interesting)
Re:Cable all the way (Score:2)
Re:Cable all the way (Score:2)
New Mod Label (Score:5, Funny)
Re:Cable all the way (Score:2)
£24.99 for 512/256. (Score:4, Interesting)
But I stick with them because they have decent fast newsgroups with all the binaries. I'm talking about you, Zen.
I rang up though, and asked for IPv6 connectivity. They said they didn't do it because there was no demand for it. I said, "Well, now there's demand for it", and they said that that didn't count.
Next UK ISP with native IPv6, and newsgroups with binaries, and I'm off. You hear that, Zen [zen.co.uk]?
Re:£24.99 for 512/256. (Score:2)
I don't know about binary newsgroups or IPv6.
Don't They Know? (Score:5, Funny)
Not to brag but... (Score:2)
Lucky Bastard! (Score:2)
-Rick
Re:Not to brag but... (Score:2)
Re:Don't They Know? (Score:2)
I switched for price (Score:3, Informative)
Re:I switched for price (Score:2)
I do wish they would increase the UL
Re:I switched for price (Score:2)
Re:I switched for price (Score:2)
not really cheaper (Score:5, Interesting)
DSL is still more expensive than cable unless you have a landline already. Home telephone service is around 40$/month here, which would make DSL (assuming I could get 32$/month anyway, which seems low) that would put me at over 70$. Compared to cable which is under 60$ and comes with "free" basic cable, since there's no way not to pay for that too.
I've already got a cellphone and don't have any use for a landline. Maybe if the DSL providers were actually any better than comcast (local cable monopoly), but until they are it's not worth the extra cash.
Re:not really cheaper (Score:5, Informative)
Basic phone service for $40/month? Sounds like you're getting ripped off and/or exaggerating.
Re:not really cheaper (Score:2)
My case was the opposite, actually. I didn't want basic TV nor a landline. DSL at the faster speed is about $50 + taxes (including land line), whereas cable would be about $60 + taxes (sometimes they had deals for the first 6 months or whatever). Some people might find basic
Same here, it's really $60 (Score:3, Informative)
Re:Same here, it's really $60 (Score:2)
Re:Same here, it's really $60 (Score:3, Informative)
Re:not really cheaper (Score:2)
Low? With a 1-year contract, you can get it for $15/mo, easily.
Besides, cable companies often try pulling the same crap as telcos, and telcos sometimes have minimal fees for DSL-only lines, so YMMV greatly.
Re:not really cheaper (Score:2, Informative)
Re:not really cheaper (Score:2)
Re:not really cheaper (Score:2)
Re:not really cheaper (Score:2)
So, the cable company penalizes you for not buying ot
Not necessarily true. (Score:2)
I don't know that I agree with that. I definitely spend more on DSL than I would with either Cable or plain DSL from ATT (I get mine from Speakeasy). I'm one their Onelink plan, which means you don need a phone /line/number from your telco. I choose to pay more for my DSL because: 1) I get pretty incredible customer support from Speakeasy and 2) Speakeasy allows me to ANYTHING with my connection. I also have VoIP throu
To get the best DSL price... (Score:2)
Re:To get the best DSL price... (Score:2)
-Rick
Re:To get the best DSL price... (Score:2)
768/128
This just in! (Score:2)
OK, if that qualifies as news, I think it's time to shut the computer down and start the weekend...
France wins (Score:5, Informative)
24mbit internet
WIFI MIMO router/set-top box, 1gb webspace
Telephone line fees included, you really have nothing else to pay
Unlimited free national and international POTS phone
200 digital TV channels over DSL, HDTV and DVB-T compatible terminal included..
This one company litterally drove the prices down and the offerings up.. Now that the prices are low enough, everybody is catching up on triple-play. They also have other plans, like building a mesh of wifi hotspots using their set-top boxes to route free wireless VoIP calls. Free cell phones, just imagine that..
Re:France wins (Score:2)
Re:France wins (Score:2, Insightful)
Here in the US the Telecos are spending much $$$ to guarantee that the laws don't allow such access. Land lines are a natural monopoly and there's lots of m
Re:France wins (not) (Score:3, Informative)
http://en.wikipedia.org/wiki/HKBN [wikipedia.org]
Comcast (Score:2, Interesting)
Once that was done, I noticed they'd pointed me to a DNS server that responded to every request with the same IP- they were bouncing all my requests through one of their servers. This broke a whole lot of shit, as you can imagine. I called to ask abo
fyi... (Score:2, Informative)
Re:fyi... (Score:2)
austin texas
Re:fyi... (Score:2)
Re:fyi... (Score:2)
Only cheaper for the first month... (Score:2)
age discrepancy (Score:5, Interesting)
Why cable companies haven't changed their marketing to reflect this, I have no idea. Behind the times, I guess.
--triv
Re:age discrepancy (Score:2)
You get a dial tone and local calls for $5~$10 a month
DSL + $5~$10 is cheaper than most cable offerings (not including their introductory prices).
Re:age discrepancy (Score:2)
So, DSL remains useful for those that don't want to deal with cable companies, even if one has to tack on a land line, which is no great e
When will we quit shopping for price... (Score:4, Interesting)
Just got of the phone with FIOS (verizon) - for 34 dollars they can get me a nice fast completely non-functional DSL connection. Of course to get what this geek really REALLY wants (simple, static address - ToS that allow me to run services) will cost 99.95 a month for the same upload speed.
Idiot on the phone line couldn't justify the 60 dollar cost difference, other than to say that is the price difference between static and dynamic IP (well, the download speed on the static was a little faster - They couldn't price out a static address on the slower speed).
This was all started by Verizon sending a flunky to my door saying they were REQUIRING me to change to FIOS. Was a fun discussion with said flunky -
"Will you allow me to run a service"
"What do you want that for"
"So I can run my e-mail server"
"We provide an e-mail service"
"No you don't"
etc. etc. etc. Turns out they really were just looking for upgrade oportunities - wonder how many of my neighbors fell for it (I know one didn't because said flunky said the guy down the street was asking the same questions
"The one with the Dogs?"
"Yeah, how do you know"
"Because he is a system admin - and he is smart"
Phone Companies? (Score:2)
Sad to see that folks are already assuming that RBOCs control everything that comes over their lines. I admit we're getting there, but there are still independent DSL providers. I'm a fan of Sonic.net, which is not only cheap and well-run, but reasonably geek-friendly. Or if you're a serious geek with semi-deep pockets, you can try Speakeasy, which doesn't even require that you have phone service.
SBC/ATT and DSL Offerings (Score:2, Informative)
It's the government, stupid. (Score:2)
Under pressure of the telecom lobbies, the US government has made extensive non-moves, leaving the issues solely to the frea mahkit, which always translate in the companies gouging their clients with extremely poor service.
In much saner countries where the government does not lick big companies arses, there have been positive measures and involvement so the broadband penetration is much higher.
For instance, I am a member of a telecom co-op and pay around $
Re:It's the government, stupid. (Score:2)
BUT, such service costs $55 where I live with 5 IP and no restrictions because it is a business account
I can get the same service with 1 IP for about the same price. I don't know if they would limit a webserver or mail. I have run both using DYNdns for several years and no one has complained to me.
That's funny, my rates are increasing. (Score:4, Informative)
Over the past three years I've received two letters from SBC notifying me that my DSL rates are increasing. Meanwhile I've noticed that the rates for the first year of service have steadily dropped. I used to think that I was just getting hammered because here in Dallas, my options were pretty much limited to SBC and Comcast (with a touch of Earthlink and a couple of more expensive options). Nope. My parents in Spokane suffered a rate increase in the past year. My sister in San Francisco had a rate increase in the past two years. My brother in New York has also experienced a rate increase recently. Meanwhile while (unsuccessfully) looking around for a new provider, I've noticed that the rates for the first year of service have steadily dropped (just as the article claimed). The ISPs are monopolistic crack dealers - and they know it. For being a free market, I don't feel so free.
Re:That's funny, my rates are increasing. (Score:2)
When they announce things like this I call up and politely ask to be given the same deal as a new customer. I get a 1 year price for a one year commitment. Just remember what Jesus says when dealing with them: "Don't be a dick."
My current rate is $21.99 for 1.5. I got about 4 or 5 months left and I can sign up with whatever the promo rate system.
Sprint has my business for the same reason. Every 2 years I get a new phone practicall
Re:That's funny, my rates are increasing. (Score:2)
Ripped off in Utah (Score:2)
3MBit cable from Comcast runs $60/month (although they're always sending me flyers advertising $25/month for three months but not listing the price after that anywhere... geez, are there really customers who are so irresponsibly myopic they won't even look three months into the future?)
Everything WILL be free eventually. (Score:2)
I took the plunge yesterday... (Score:2)
I have to agree that the aggressive pricing strategy of DSL service providers *is* having an impact. Just yesterday, I switched away from Comcast's residential high-speed Internet service to SBC-Yahoo's introductory DSL plan. After looking at both services, I simply couldn't ignore DSL's ultra-low $12.99 a month rate. To compare, Comcast cost me nearly $50 a month. In my case, it just didn't make any sense to keep paying a higher fee for bandwidth I don't use.
Occasionally, I download an ISO, and then
I'd consider ADSL.. (Score:2)
a) My phone company wasn't evil (Telus - British Columbia, Canada)
and
b) If I hadn't cut my phone line this past September and switched to Vonage (see (a) above).
At the moment here in BC, we pay about $40CDN/mo for 5Mbps/500Kbps. Telus has some agressive deals (including a 19" LCD monitor if you sign a 3 year contract), but I'm sticking with Shaw for the forseeable future).
DSL and Cable both suck. (Score:2)
I'm assuming a little linux box could take care of splitting the traffic between two connections, depending on which is 'shorter'/better for that traffic at that time, and with p2p/torrent type applications, ideally allowing both connections to be
Take advantage of the Specials (Score:2)
(Here's a source on that) (Score:2)
Interference != interference (Score:2)
The physics term "interference" refers to the additive combination of multiple waves in a medium. The colloquial conception of "interference", on the other hand, refers to a characteristic of radio receivers that are fooled by specific forms of physical interference to the point that it impedes their ability to select one signal out of multiple signals. But with spatial multiplexing methods (such as parabolic reflectors [wikipedia.org], cylindrical reflectors [wikipedia.org], MIMO antenna arrays [wikipedia.org], etc.), it is possible to make much more s
Um... How do you figure this is flamebait? (n/t) (Score:2)
Re:Um... How do you figure this is flamebait? (n/t (Score:2)
Someone with mod points.
Re:$0? (Score:2)
Queue up the Meta Posts (Score:2)
Re:Price is not the primary motivator here... (Score:2)
Re:unhappy comcast customer here (Score:2)
Re:should be like roads (Score:2, Insightful)
Sure, and food should be free, housing should be free, transportation should be free - can't live without those things. Maybe we should just live in a Star Trek world you freakin' Commie.
If the 'most-local layer of governments' provides a service IT'S NOT FREE!!! Where do you think the fees levied on 'providers of specific services' comes from? The c
Re:should be like roads (Score:2)
That would be great.
Point in fact, if certian technologies come to fruition, we may be ably to create a world where basic things are free and no longer thought about.
Re:should be like roads (Score:2)
Actually, those things should be free. Doesn't mean they are going to be anytime soon.
But to say that every human on the planet does not deserve food, shelter, water, and basic means...
If we find ourself with the means of infinite energy, infinite free machine labor, and infinite resources the
Re:The sticks (Score:2)
Ask around for IDSL (Score:2)
Re:I'm a consumer (Score:2)
Default - 2
Linksys - 3
Wireless - 2
Enjoy - 1 - obviously shared on purpose.
It's eight right now, but usually it's only 5~6.
I pay C$40/month for my VOIP line, and they throw in a 6Mbs down