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US Broadband ISPs Expect Price Cuts
prostoalex writes "US broadband providers are trying to avoid the price wars, but the cost of DSL and cable hookups is still headed down with major promotions from players like Comcast and Yahoo/SBC. Currently there are 22 million US subscribers, 2 million of which subscribed during the past three months. It looks like the prices for broadband Internet are headed towards $20-30/month range, although most operators prefer to lock you into a yearly contract or provide special price for the first several months only."
And AOL dialup will still cost $24.99 a month.
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SBC promises download speeds as fast 1.5 megabits per second - one megabit is 1,000 kilobits - ...
Way to break down megabits per second into something the average person can understand, David Koenig. I guess you're trying to compare 56kbps to 1.5mbps, but still, how many people reading IWon News know what a kilobit is? Why don't you say "1.5 megabits per second means 1 megabyte takes 5.3 seconds to download"? That's something people could understand.
At least Libraries of Congress aren't in your conversion rate.
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well... price wars typically trigger shakeouts where smaller competitors get driven out of business, so I'm glad price wars are not going ahead... small competitors making a viable go of it in the long run means increased competition.
Price wars are also typical 'testing grounds' in oligopoly situations, sometimes where one large provider tests another (that price wars are not imminent suggests providers are in perfect harmony [unlikely] or have too tight margins to risk a price war), othertimes they are coordinated attempts to show the consumer what great value they get and are more spin than substance.
Price wars are a bad thing - they cause small competitors to be driven out of business (long term this means the market in the hands of a powerful few) and the fact a company can undertake a price war means it has room to move even with discounted prices (surely bloated prices... it is in need of competition but has the 'price war' signal to any potential competition they are alert and the going will be rough).
Price wars are never a good thing.
karma karma karma karma karma chameleon, you come and go, you come and go.
Huh? Dont think they have a lot in common? They do...
Casual dining restaraunts charge higher prices, and serve you more food than you (should) eat. This leads to fatter americans (eating more than they should, you wouldnt want to be wasteful would you?), and increased margins for the restaraunts. As long as you think, "hey, for $8 I got a lot of food", you'll be OK with it.
Cable companies are starting to do the same thing. My cable co (Cox), is looking at replacing the 1.5/128 plan with 3.0/256, and creating a new plan for $80 for 4.0/384.
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If you're not outraged, then you're not paying attention.
The telcos still have a major problem with selling and deploying DSL. Their copper wire infrastructure sucks and they aren't interested in doing anything, especially spending money, to improve it. Even though I live in an area with above average population density, it's 25,000 feet to the nearest central office. That means no DSL for me. The number and placement of central offices were frozen decades ago, when this was primarily a rural area. New housing developments get SLCs (subscriber line concentrators), not copper pairs to a central office. If the telcos were serious about providing DSL service, they would upgrade their network to make DSL available to every customer, not just those lucky enough to live near a central office. I'm not a big fan of the cable company, but they have spent far more money than the telco on upgrading and extending their network.
Mea navis aericumbens anguillis abundat
T1s have been historically overpriced, so it isn't really a fair comparison. What would T1s cost in a truly competitive market?
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The article states that Comcast was offering a $19.99 rate for cable modem rates.
That is incorrect. Comcast has run this deal multiple times where they offer $19.99 a month for three months. After that the rates go back up to something around $45.99 (IIRC). The rate is not being offered right now but will be back in a few months.
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You make an excellent comparison, but I partially disagree. Cable and T1 are different paradigms in terms of connections. Yes, you can compare based on megabits, but that is not the whole picture. T1 is a dedicated line. Even if you lease a fractional T1, you still have X amount of dedicated bandwidth, up and down, that is reserved for your use. With cable, the cable company can overload your cable loop. Bandwidth = cable size / customers, roughly. It fluctuates based on how many people are using it at a given time and how much bandwidth they are using.
Then the whole static/dynamic IP issue comes into play. Granted those of us with cable routers that keep renewing DHCP leases basically have a static IP, then again, it is not guaranteed. Mine has changed at least twice in the year I've been at this address. That does me no good if I want to put my semi-static IP in the DNS database.
Connections do get faster, both for residential and commercial use. My web host provider has multiple OC-12s. Between all eight of their backbone providers they have over 200 MBps of bandwidth. That was unheard of even ten years ago. Home broadband, ten years ago, usually meant you ran a cable from your office to your home, assuming you lived close enough, or you used a university computer lab. Now it is in the hands of almost anybody who lives near an urban center. You are correct on that account. I certainly am grateful that corporate America thinks there is enough money to be made by selling me broadband. They at least got that much right about me as a consumer ;-)
24 beers in a case, 24 hours in a day. Coincidence? I think not!
I got Comcast and they started me of at $25 a month for 6 months and that was sweet. After the 6 months was up they started charging me $56 for it. It would have been $46 a month if I had subscribed to their cable TV package but since I don't watch TV I declined their offer. When I called them up and told them I want to cancel because Quest has offered me DSL for $29 a month. Of course, I have not intention of switching to DSL , which sucks big time around this area. Needless to say when the support/sales lady heard that I wanted to cancel she gave me a $30 a month package for 3 more months. I told here I will cancel at the end of this deal and she said well give us a call and if we have a deal in 3 months we'll give it to you. I guess I am gonna call them up and do the cancellation dance all over again.
Moral of the story, If you tell them you want to cancel they'll do everything in their power to keep you as a customer.
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Oh, bite me. At least you people in Europe have broadband. These little price wars are nice and all, but all they're doing is fighting over a handful of urban customers while continuing to ignore the teeming millions of us in suburbia (I don't exactly live on a farm here!). Keeping myself from giving up and just spending the $600 to sign up for EarthLink Satellite (at $70/month!) is getting more and more difficult. They do ethernet now...
Anybody who thinks privatizing the US Postal Service is a good idea needs to take a long, hard look at the broadband market here.
I pay about $55/mo for 1.5 Mb, but in all seriousness, since their TOS forbids almost anything useful, the only time I really NEED that bandwidth is when I'm downloading the ISOs for a new version of linux, or the occasional game demo. I'm thinking I might be nearly as satisfied with a 128K DSL connection, which is $20/mo less. Granted, there's a huge diffrence in bandwidth there, but again...the time I'd use 1.5 Mbs is so limited, I'm beginning to wonder if it's worth the extra money.
"I don't get it - aren't monopolies/price fixing illegal?"
...now, I personally think that our own "deregulation" efforts are a terrible fake that just re-regulate things for the benefit of those same telcos, but that's a different story entirely.
No, not really. Common misconception. Most monopolies are illegal, but they can be legally sanctioned and even protected for a few reasons. One of the most widespread of these is companies that create expensive infrastructure. The idea is that it would be horribly inefficient to have a free market where companies all built their own phone lines, because they wouldn't work together and they would duplicate each other's infrastructure.
Picture New York City, a Very Attractive Market. There would be 25 telephone companies that all had a geographically comprehensive network there; you could get service from any of them and it would cost as low as market-possible. But it might cost arm+leg to connect to someone across the street who had another company, especially if that company didn't have a good contract with yours. And the market-possible price might even end up higher than they are now, because each company had to invest in running wire all over manhattan.
That's worst case, but you get the idea. It is easy to fall into a knee-jerk "regulation == bad" mentality, when in reality a lot of government regulation is damned handy. Think rural electrification or the EPA. In this case it's a hard call, but it is worth noting that most places that people point to where telecom is better than here (US) there is more regulation, not less. It's just that the regulation seems more tuned to the benefit of the consumer, rather than the telco.
In other words, we don't need to get rid of regulation, we need *better* regulation.
Given a choice between free speech and free beer, most people will take the beer.
Price wars are a bad thing - they cause small competitors to be driven out of business...
Not necessarily. Price wars usually means there are several companies trying to establish certain market share. What you're talking about is when one deep pocketed company sells a product well beyond the price in order to drive competition out of business. Once the competitors are out of question, the price goes back up. I believe this process is called dumping in economics, and is considered illegal. It might be tricky to prove though.
There's nothing wrong with healthy competition, it drives innovation, and customers get better product for lower price.
What's REALLY bad is monopoly.
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And this is +3 100% Insightful?
Nobody said you had to be smart to be a moderator... after all, I moderate :-)
24 beers in a case, 24 hours in a day. Coincidence? I think not!