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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."
I currently pay £34.99 per month for my 10Mb connection from NTL here in England.
Even though its more expensive than ADSL, W00000t is all I can say!
I prefer my cable because ADSL still appears to dialup and the IP changes every time you sneeze.
The ethernet cable out the back of my machine is designed for super quick data connections and thats exactly what it does.
As an example:
I just downloaded Ubuntu (697.8MB) over http in under 10minutes, ~1200kB per second is nice.
as a FYI for other NTL broadband customers get a cable modem the set top boxes cannot handle 10Mbit (but NTL will be happy to take your money anyway).
liqbase
£24.99 for 512/256.
:)
But I stick with them because they have decent fast newsgroups with all the binaries. I'm talking about you, Zen.
I rang up though, and asked for IPv6 connectivity. They said they didn't do it because there was no demand for it. I said, "Well, now there's demand for it", and they said that that didn't count.
Next UK ISP with native IPv6, and newsgroups with binaries, and I'm off. You hear that, Zen?
Get your own free personal location tracker
"At the end of 2005, the average price of DSL service was about $32 per month, roughly $9 less than cable, according to research firm IDC."
DSL is still more expensive than cable unless you have a landline already. Home telephone service is around 40$/month here, which would make DSL (assuming I could get 32$/month anyway, which seems low) that would put me at over 70$. Compared to cable which is under 60$ and comes with "free" basic cable, since there's no way not to pay for that too.
I've already got a cellphone and don't have any use for a landline. Maybe if the DSL providers were actually any better than comcast (local cable monopoly), but until they are it's not worth the extra cash.
The Farewell Tour II
In a properly working market, the price is the determined by the costs of the sellers, not the desires of the buyers. In most circumstances, this means marginal cost plus fair return on investment.
Think about it this way. What are the things you are willing to pay the most for? How about water, for example? It surely is much more important than DSL. Yet you pay pennies for water, even though your willingness to pay is much higher. This is because the COST of providing water is very low, and competition assures that the price tracks these costs.
My comcast service went out, and when it came back up I had to re-register it when it forced me to their "sign up and download a 20 meg exe of bullshit to get it going" which made me unplug my linux based router, plug into a windows machine to get it up again.
Once that was done, I noticed they'd pointed me to a DNS server that responded to every request with the same IP- they were bouncing all my requests through one of their servers. This broke a whole lot of shit, as you can imagine. I called to ask about this, and was promptly hung up on when I answered "yes" to "can you load web pages?"
I "fixed" the problem by finding my own DNS servers to use in the meantime, but who knows how long it'll be until they stop DNS requests from traversing out into the real 'net. I am pondering a switch to speakeasy (100 bucks a month for comparable speeds, trying to convince my wife on the its-worth-it-because-they-dont-fuck-with-you angle.)
WTF is up with that? Does anyone know why they're trying to force all my traffic access through a man-in-the-middle like this?
On topic: Comcast costs about $40 more than it should, since this new version of their "service" isn't a real internet connection at all IMO.
I don't need no instructions to know how to rock!!!!
Why cable companies haven't changed their marketing to reflect this, I have no idea. Behind the times, I guess.
--triv
That wireless cell phone company could possibly own a big chunk of the cable company or vise versa. Competition is limited at best. The only real threat to the communications monopoly is ad-hoc wireless mesh, created by the users. If you are tied to a landline or corporate wireless, then you are owned by them.
What?
Just got of the phone with FIOS (verizon) - for 34 dollars they can get me a nice fast completely non-functional DSL connection. Of course to get what this geek really REALLY wants (simple, static address - ToS that allow me to run services) will cost 99.95 a month for the same upload speed.
Idiot on the phone line couldn't justify the 60 dollar cost difference, other than to say that is the price difference between static and dynamic IP (well, the download speed on the static was a little faster - They couldn't price out a static address on the slower speed).
This was all started by Verizon sending a flunky to my door saying they were REQUIRING me to change to FIOS. Was a fun discussion with said flunky -
"Will you allow me to run a service"
"What do you want that for"
"So I can run my e-mail server"
"We provide an e-mail service"
"No you don't"
etc. etc. etc. Turns out they really were just looking for upgrade oportunities - wonder how many of my neighbors fell for it (I know one didn't because said flunky said the guy down the street was asking the same questions
"The one with the Dogs?"
"Yeah, how do you know"
"Because he is a system admin - and he is smart"
I have mod points and I am not afraid to use them
I was about to say the same thing, but the thing is, France is not so much modern, as US is really lagging nowadays. Compare to Japan, where 100 Mbps fiber is common place, where vendors (most of the time a cutie) will stop you in the street or at any computer shop to offer you an ADSL/fiber/whatever contract. Absolute minimum is 8 Mbps and for a few more yens, the next offer they highly recommand you is 40 Mbps.
good points, but actually, we can either have a sharp demand/supply curve, or a flat one, or a moderately sloped one.
...
in some markets, we may find that the desires of the buyers are the most significant in determing the price of the service (broadband, considering different flavors/brands/speeds).
in other markets, we may find that the lack of competition amongst competitors (places where the same large corporation owns the cable, wireless, and DSL services or reaches a colluding anti-competitive market agreement in our under-regulated market) means that the price is determined by the sellers and their most efficient return on investment (an example being renters where most apartment buildings are owned by the same conglomerate or are dorm rooms owned by a specific college).
and then other markets may be inbetween these two extremes.
Assuming there isn't a monopoly or oligopoly in our current environment will lead one to inaccurately assume perfect competition, with easy barrier of entry (they may only permit one cable provider or provide barriers to cell towers or land lines for DSL), perfect information (knowing what the current and future rates are and consumers having easy access to information to determine the actual true cost (both teaser rate and lock-in rate and cost/length of service contract and installation/disconnect fees)), and perfect liquidity of capital with sufficient equivalent capital for all consumers.
Such a perfect world (the latter case) doesn't exist anywhere I've seen. Thus, we need to use a better economic model, assuming imperfect information for competitors (no published rates), sticky prices (regulator sets levels), imperfect information for consumers (only teaser rates seen and fine print obscuring full cost so what you think is $15 is really $200 when you install), and high barriers to entry (restrictions on building, long permit schedules, long wait times for new installations, lack of supply for materials to install, shortage of contractors to install, etc).
In other words, you're both right. And you're both wrong.
remember, if you get two or more economists in a room, you'll get a number of different answers equal to the number of economists in the room
(grin)
-- Tigger warning: This post may contain tiggers! --
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.
If you discuss this with internal financial analysts at a respective ILEC, the driver for this discount is an aggressive cross-subsidy from the dying copper voice "monopoly" business to establish the new monopoly for the next 40-50 years. Cable is seen as weak, given heavy and increasing content costs and does not yield sufficient margins to prop up a dumping approach in broadband. Wireless is considered a terrible threat and needs to be killed while it is trying to recoop serious capital investment costs. There is nothing of higher priority in AT&T / Verizon / Qwest / etc. now. They firmly believe that if they don't eliminate the competition now, their laggard approach to tech and fat corporate structures won't survive another attack by the cable and wireless barbarians. Rome will not go down easily.
The ILECs have gotten all the support needed to pay off both parties and get their dumping program and cross subsidies in place. Like Rome, they have crooked Senators in both parties - McCain, Hagel, Tauzin (now working for them), McCurry, Sen. Clinton, Kennedy, Schumer all receive heavy ILEC support and are thought of as safe votes. Gore is a critical chess piece for them, as he failed them the first time around with their plan to control the NAPS and understands any future run and money will be expected to generate a return. Just 10 years ago, it would have been immediately attacked when post-divestiture auditors observed funds being transferred from the phone business to broadband, but nobody cares anymore. The FCC clearly understands that neither party wants any roadblock to ILEC resurgance.
To the consumer, they should enjoy the next years, and understand in 5+ years that their $120 to $240 per month in monopoly phone, broadband (without the frills necessary for today and measured/restricted use provisions), blocked VoIP, limited port options (e.g. HTTP/HTTPS is permitted, all non-authorized ports denied, http proxy required, no third party SMTP permitted, no IRC, no FTP, no SSH, VPN at a commercial rate, etc.) is the cost for their savings today. Expect pervasive DRM and surveillance of every click.
They did it to themselves years ago by supporting consolidation in the gas business and are paying for it now (with record multi-billion quarterly profits) and will pay for it again with the new Bell system.
Don't believe me. Look at the contributions yourself and ask any mid-level or higher ILEC manager about the briefings from senior management about their "owning the Internet" strategy. Ask them about how their ILEC has capitalized several years of loss through restructuring charges to gain control. Read their 10Ks on edgar.sec.gov.
I know what you mean, my landline provider was Ameritech and my cellular provider was MCI Worldcomm. Worldcomm went belly up and had their mobile phone section bought by AT&T Wireless. Ameritech then got bought by SBC. AT&T Wireless got bought by Cingular which was half owned by SBC and half by BellSouth. Then SBC went and bought AT&T, inc. and becoming at&t. Finally at&t is merging with BellSouth and all of a sudden my landline and cellular providers are soon to be the same company! At least it doesn't seem as though my cable (TV and internet) provider Comcast is going to be merging with any of the above anytime soon (I hope...).