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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.
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.
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*