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Report: Broadband Too Expensive For Many
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.
This really isn't all that surprising - sure, I've got a home network with a cable modem and my own mail and DNS servers and such, but I'm a big geek who likes tinkering with this sort of shit, so broadband is useful to me.
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
I love these reports. Broadband is too expensive.... No market penetration.... Dial-up is just fine....yada, yada, yada.
If the lackluster demand of broadband is a reality, then how the hell are people pirating music en masse? Does the RIAA expect people to believe that internet users are cheap people with hours of time to waste downloading music through a 56k modem connection?
Clearly the RIAA is using the non-existent broadband threat to scare legislators into writing even more copyright laws.
-ted
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.
Stefan Axelsson
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
7d9e63e9501751ff4bf9307989d5623d *SheepHead
Broadband services are currently quite profitable for cable companies. Getting new customers at a lower price point would not necessarily be more profitable.
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.
I'd be willing to bet these same people pay for at least extended basic cable--I'm the only person I know who pays for cable and only gets pure basic, and that's because our reception is horrible at my house. Those same people may very well drive newish cars, buy new clothes with a fair frequency, and shell out $40 a month for a 4000 evening minutes that they don't actually use.
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.
is that broadband Internet is a disruptive technology.
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.
The living have better things to do than to continue hating the dead.
I'd be willing to bet these same people pay for at least extended basic cable--I'm the only person I know who pays for cable and only gets pure basic, and that's because our reception is horrible at my house. Those same people may very well drive newish cars, buy new clothes with a fair frequency, and shell out $40 a month for a 4000 evening minutes that they don't actually use.
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
Lots of petrified grits
This is not a troll against the original post, just an observation that too many people are acting like "broadband" is the cure-all for poor television, lack of web content, and if you believe Congress, our weak economy.....this is hogwash!
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....
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.