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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.
The New York Times has a story claiming that Netflix ships almost as much information as the Internet does. (1500 terabytes versus 2000-4000 terabytes.) So who needs wired broadband?
The digital music channels are the *ONLY* and I do mean *ONLY* thing I use my cable TV for. So its worth it for me to get quality music choices and not have to listen to the shit on the radio.
I also believe part of the reason that people arent springing the extra bucks on high speed access is the economy. 2nd place would be the fact that most of them havent experienced it first-hand to see really how bad modem dial-up is. Sure, many people might have fast web access in the office, but not everyone does.
siri
if you only have one line and you just check e-mail once or twice a day and do some light web surfing
One thing that I try to impress upon people about broadband is that when you have it, you will do MORE than just check email once or twice a day, etc. In my opinion, the always-on connection is every bit as valuable as the speed. When you're always on, it suddenly makes sense to use your connection to check movie times, check headlines, check weather, get a phone number, use mapquest, and a ton of other stuff you used to do with a phone/phonebook/map/newspaper/etc.
Evil is the money of root.
We also signed up for digital cable when Cox began offering and promoting it. We have Cox phone and cable Internet, so digital seemed like a nice thing to upgrade to.
That was until we saw the actual bill. Like the extra $8.00 phone line that actually cost $16.73 a month, digital cable came brought our combined bill to $205 per month (little things like unit rentals, taxes, fees, etc. add up). When we realized we never watched the dozen HBO channels (Sopranos looks the same on the basic HBO), only needed to see Groundhog Day once per day, digital PayPerView had the same annoying feature of starting the same movie at the same time across a half-dozen channels, we figured the only thing that was unique to digital cable was the music, and that wasn't worth an additional $100/month.
So we dropped it too.
*scoove*
the phone companies and
cable/satellite companies.
Sure, I can switch phone companies. But I lose my phone number (still, even though they make me dial 10 digits to call my nextdoor neighbor, which was supposed to be so I could keep my phone number). But wait, for a bit more, you can block your phone number. And for a bit more, you can block people who block their phone number. But in either case, the phone company will sell your phone number to telemarketers to ensure that you do get calls that you will want to block...thus ensuring that you buy caller ID. Oh, and now they'll raise the price for caller ID, thank you very much. And if your state creates a no-call list, you'll have to pay for that too. Oh, but wait, some companies can get a state license to ignore the list you paid for and call you anyway. But you can pay for caller ID....
The phone and cable companies introduced high-speed internet, and the prices go up while the bandwidth goes down. This year's fastest processors cost the same as last year's that were slower. This year's hard drives are bigger and faster for about the same as last year's. You can have more memory cheaper than last year. But they want to you upgrade to DSL or cable-modems by paying more. But if you actually use the bandwidth, they'll adjust the prices so you have to pay more, or you get less bandwidth...not much more than dialup in the end. Oh yeah, and the basic phone bill will go up too, to cover the cost of the digital services they are now offering. And they don't even offer any package deals with an actual discount (they just put all the same chareges on one bill).
And don't get me started on cable/satellite. They raised my cable rates a few years back to pay for "improving the infrastructure" so they could "upgrade to digital cable." So now they have digital cable, but I still have to pay extra for it? I want my money back then (I guess we aren't demaning it back because we have a short memory)! And then they raise the price of basic cable again, and again, and just for good measure, again...because you know electronics equipment prices just keep skyrocketing and the number of subscribers keeps going down...oh wait.... And then have the nerve to ask why I don't want to pay more for digital cable. Besides, then I can pay even more by ordering pay-per-view!
What I wish is that I could take this offer I got for free satellite equipment and installation and then programming at $21.99/mo and the cable company would meet it (you know, the way BestBuy does with a special at Circuit City?), instead of charging me $36.99/mo for fewer analog channels. I want the convenience of analog so I don't have to have a box (and the requisite fees) for all four TVs and both VCRs, and so I can use the picture-in-picture I paid for (we already went through this box-per-TV/VCR crap with cable tuners). Plus, I don't want to look at the over-filtered, over-compressed digital crap they send to the satellites. It may be digital, but it's garbage. I'd rather look at a bit of analog noise than golf greens with no details because they were completely filtered out and the halos and distortions of too-low bitrates.
And I also wish that one of the phone companies would offer me the following package:
local phone at as significant discount with FREE features (caller ID/call waiting/call blocking)
long distance w/no fee at a low minute rate
cel phone with decent minutes for a cheap monthly rate
television for
high-speed internet for
Xesdeeni
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.
Except for CompuServe the rest came fairly late in the "telecomputing" market; after home BBSes and small business BBSes were quite popular. Compuserve was succcsful in selling content; since they had high quality content that no one else had (often at rates as high as $75 / hr). They also managed to get quite a lot of commercial traffic both B2C and B2B (though they weren't call that then). MCI focused heavily on genuine communication between users and they failed early.
Genie was essentially a cheap compuserve; they charged a flat fee per month rather than an hourly rate and had lower quality content but because of the high user base who wasn't worried about connect time they had good quality discussion boards. Its also important to point out Genie was not covering its real costs. Genie was using GE's mainframe -- dialup system during off hours (they charged something like $17 an hour if you used it during business hours); it would have been impossible to pay for that infastructure from genie revenue.
The closest to a service that sold low quality content, by which I mean stuff that wasn't expensive to buy the rights too, with unlimited connect was Prodigy which was fairly succesful.
And lets not forget that AOL didn't start off as an ISP. They built their market up during the last days of the BBSes.
When the internet started offering lots of content cheaply all the services started becoming ISPs. Since they were all large corporations and the internet was very uncensored they all sort of wanted to get out of the business and didn't fight very hard
Genie became pointless; though their online gaming division managed to do quite well for a few more years until sites dedicated to specific high end graphics games became popular
Prodegy was able to survive for a while but IBM and Sears lost interest
Compuserve is still around offering dialup -> corporate system connection more like MCI's market back in the 1980's.
The small business BBSes have moved onto the internet (in terms of functionality not necc. ownership).
So I don't think its quite accurate the model failed. What it showed was:
a) A small group of customers will pay a lot of money for very high quality content they can't get anywhere else
b) A large group of customers will pay a little bit of money for having lots of content even if not of particularly high quality in one place
c) Most customers won't pay anything extra regardless though they will take advantage of free throw ins and might be convertable to either class (a) or (b) if you can get them hooked (the AOL model).
I don't see how that's much different from the current internet.
Sites like the wall street journal which have unique content at a lowish price are doing terrifically. Free discussion sites like Slashdot get tons of traffic but have trouble charging for it. Sites with high end content are able to charge a lot for it to a small group but don't have wide penetration (high quality porn sites, article archives).
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.
A view from the other side of the table...
My company provides broadband to a bunch of small towns in a part of "fly-over country." Our service is $29.95 a month, and an installation of $250 (includes equipment).
Unfortunately, there is significant pressure to hike rates. Why? Customer support costs, mostly from crummy operating system software.
One out of two installs needs substantial work due to Win95/Win98/WinME configurations with years of clutter, garbage and registry hell. Dialup optimization tools messing with MTUs, mess all over (I reinstall my Win2K annually - apparently not many other people do). Customers don't understand that system maintenance is not our problem but theirs. They're like a 5'6" tall, 500 pound human who expects to run a marathon on broadband.
Then there's the monthly "I blew away my system config - help me fix it." Many calls require a great amount of support. Yet nobody wants to pay for support - "I'm paying you for service - I expect service, even if I mess up my computer." As if GM or Ford provided warrenties for stupidity, crashes, etc...
Our Linux customers are a dream. They know how to take care of their system, and understand that config screwups, system maintenance, etc. are their issue.
High prices for broadband unfortunately appear to be a Microsoft tax. Maybe we need to approach broadband the same way:
Linux, *BSD, & Mac: $29.95/month unlimited (Mac users are slow to upgrade their OS though... half of them we run into have ancient versions.. 6.?)
Windows95/ME: Upgrade (we already tell them that today)
Win98/NT/2K/XP: add $20/month for StupidOS tax unless you sign the "Surf at your own risk" disclaimer.
*scoove*