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Why Broadband Prices Haven't Decreased
pdragon04 writes "After a new technology is introduced to the market, there is usually a predictable decrease in price as it becomes more common. Laptops experienced precipitous price drops during the past decade. Digital cameras, personal computers, and computer chips all followed similar steep declines in price. Has the price of broadband Internet followed the same model? Shane Greenstein decided to look into it. "
Price per Mbps has most definetly dropped down. I'm paying $2/Mbps now... I used to pay $40/Mbps 6 years ago.
Not quite so.
The speed of evolution in Broadband technology prevents the bill from dropping. By the time the equipment is fully depreciated and your bill _CAN_ drop it has to be replaced with a next gen equipment. No broadband tech has lived for more than 3 years so far.
DSL with ATM backhaul, DSL with Ethernet Backhaul, DSL2+, VDSL/FTTC and before the latter is anywhere near depreciated we are marching into PON/GPON land. Same for Cable - Docsis 1.0, 1.2, 2.0, 3.0 over 12 years.
It may start dropping once we are in the land of PON. That is the first technology so far which does not look like an ephemeral stopgap.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
http://www.sigsegv.cx/
Finland has half the population density of the US and far faster, cheaper broadband. NYC has huge population density, but very slow, very expensive broadband.
The key factor is competition: US infrastructure owners are allowed to block competitors from using their bits of wire. This creates an almost insurmountable barrier to entry on the market and effectively establishes local monopolies. Consumers have little or no choice, usually.
Everywhere else in the world has a regulatory framework that enforces open access: owners of infrastructure have to sell access to their cabling to all comers at non-discriminatory rates. As a result setting up an ISP is cheap and easy, there is enormous competition, and consumers get fast broadband for chickenfeed.
Here's a lecture by Lessig on the subject:
http://lessig.blip.tv/file/3485790
I live in Finland. We have 41.124 persons per square mile. You have 81.769 persons per square mile. Yet for some reasons broadband prices here are dirt cheap compared to yours. How is that possible?
Just think about it. You have extremely expensive broadband even in places such as New York which is bustling with people. We can get faster and cheaper connections in middle of nowhere (outside the few major cities).