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How Much Should Broadband Cost?
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."
These low prices are only to gain market share, and things will change. I think it should cost as much as the consumer is willing to pay - at least that is how it works when you have a properly working capitalist system. But you see, the large telcos and cable companies have co-opted the system, and now are using legislation, and unfair practices to keep any competition from getting into the market. 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.
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.
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broadband should be free, provided by the most-local layer of government, as are most roads, paid for by a fee levied on providers of specific services
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 consumer, you and I. All getting the government involved does is hide the actual price that the cable company gets paid because they sign some magic contract with the city that you and I will never see.
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They did the smart thing and forced separation of the line access and the line ownership. Japan and I believe Korea have done the same thing. They basically lay fiber to the home and then allow any provider to have equal access to that fiber. Thus you can choose whichever provider you want and the prices for those services go down due to competition.
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 money to be made bundling overpriced services to physical cables such that your customers can't chose competitors. We've also had a lot of hoopla about net neutrality legislation but that really addresses the problem at the wrong level and as such is a misguided debate. You don't have to force net neutrality if everyone can chose their own providers, and in fact it's probably a bad idea to do so rather than force line access so that the best solution can emerge in a competitive market.
no you have it backwards.
the price is set by the buyer's willingness to pay, and the quantity is set by the producer's willingness to produce at that given price. This is only consistent in perfect or near perfect competition however.
in most cases these providers are monopoly or oligopoly, which means they are allowed to either overcharge for existing service or give substandard service for the same price to extract monopoly rent. this of course is shared with legislators to insure against antitrust allegations and regulation to restore competition.
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That is correct.
whoever taught you your economics, they should be fired.That is incorrect. No cookie for you! You are probably one of those people that think competition is the goal of capitalism. That is, of course, wrong, for two reasons. First being, capitalism has no goal; it is just a term used to describe uncoerced trade. It can't have a goal. People who believe in capitalism can have goals. But saying capitalism has a goal is a logical fallacy. It is a confusion of capitalism with those who believe in it. Secondly, I realize that it is unnecessary to continue decrying the thought that competition is the the goal of capitalism as I've already shown it is not true, but it is important that one realizes the relation between competition and capitalism.
If you believed the other relation, you clearly are confused about the matter. Competition can be thought of as a beneficial side-effect of capitalism. It is, generally, one of the consequences of free trade, and it, generally, is beneficial to the market.
"marginal cost plus fair return on investment." The market is most stable when it is so. If everyone who produces/has anything to offer anything(basically everyone) cannot make enough to recover the marginal costs of the service they offer, everything goes to shit. Likewise, if they are merely able to break even, it stagnates. If they are able to make more, the economy flourishes. This is just what happens. I'm merely speaking observed results here. Government enforcement or any form of regulation in order to "ensure" this is preposterous.
And monopolies are fine. Stop whining about them. Do yourself a favor, go out and make yourself useful to yourself. You're wasting your time.
By the way, I have a monopoly on myself and my property. Also, I am a conspiracy in restraint of the trade of myself and my property. I have often refused work and other trade, such as trade in my property. Also, I recognize you as one of the many threats to my person. Please, attempt to understand what I have said here. It is in your best interest and mine. And, by that I mean, it is in my best interest if you and others realize the asshat stuff you're doing as it helps me be free. That is also one of the reasons that is in your best interest.
I'll take my offtopic, trolling, tin-foil-hat man mod now, please. Thanks.
And of course none of these pseudo-economic "analyses" take into account the near "necessity" of having high speed internet access today. This is a factor that the free market junkies keep forgetting. Supply and Demand doesn't work properly when people are required by rule or circumstance to purchase the product. Insurance is a great example of requirement by rule, and telecoms are great examples of requirement by cicumstance. This is one of the few instances where a properly balanced gov't (which only exists in the ideal) should begin to distribute the product at little to no charge using our tax dollars. Once a product becomes a public necessity, the market economy fails and an alternative becomes necessary.
He who would be a man, must be a nonconformist. -- Emerson