And when will prices start going down? I am talking about prices specifically in the US, as other nations have different pricing policies.
I often hear about Canadians paying about US$30 a month for cable, which is a far cry from the $50 dollar average here. I forgave the high prices when the broadband infrastructure was being erected, but those initial expenses should have been covered by now.
They kept promising that as more and more people used broadband, prices would fall to reasonable levels. But they havent dropped in years, even though cable and DSL is a ubiquitous technology these days.
Infrastructure is part of the problem, much of the coaxial in America is old and unable or barely able to handle digital broadband (like mine for example). DSL is limited by the number of substations in your area because you have to be within a certain distance, 17,500 feet is the max for ADSL I believe. And satellite broadband still requires dangerous rocket launches and big, expensive satellites. Teledesic, a company funded by Paul Allen, wanted to fix that problem by launching hundreds or thousands of small micro-satellites at low earth orbit…but they are flirting with bankruptcy, so no luck there at the moment.
But the real answer I think is economics, ISP’s are going to charge what the market will bear, and right now that’s about $40/mo. Broadband still isn’t widespread and I’ve seen reports that show 56K will remain the dominant connection until at least 2007. Give it a few more years, of course by the then you’ll probably want ultra-superduper-instantaneous-wireless-everywhere-broadband at the premium price.
Cable and DSL range from $35 to $50 per month for residential. Speeds are from 400kb/s to 1.5 mb/s for DSL and 400kb/s to 3mb/s for cable - both of these options gives you full time access with out tieing up a phone line.
Compare the cost:
56k dialup account $15 to $25 / month
Additional Phone Line $25/month
**Total cost Dialup $35 to $50 / month
Broadband Cost $35 to $50/month9]/b]
So about the same
Ok lets look at cost per kb/s
Dailup- lucky if you get 50kb/s (very lucky) Cost per kb/s = $1
Slow Broadband 400 kb/s, cost per kb/s = $0.125
Using the higher price for both
Now that was all well and good, but the real reason the price hasn’t gone down is that not enough people are using these services to drive down the price.
Also if you have a close by neighbor who has broadband you may be able to convince him to go in with you on a WiFi network so both of you will only be paying for one connection.
I’ll note that since dialup internet connections are already compressed, services that claim to boost your connection performance are of little to no value. Besides which, the only thing that compression benefits is the downloading of text, which makes up an extremely small proportion of the data most people download.
I too, wonder when prices are gonna start going down.
These last few years, it’s been common to read articles talking about how there’s fiber optic cable everywhere, and how cities have endured neighborhood after neighborhood having their streets ripped up in an expensive effort to lay more cable, yet the vast majority of the bandwidth is going unused.
The buzzwords I remember are “dark fiber”, refering to the unused bandwith; and the “last mile” problem, which I believe is the issue of connecting the fiber from the main trunks in the street to individual homes and businesses.
So viewing it from a simple supply and demand perspective, it appears that supply far exceeds demand. So why hasn’t the price come down?
My gut feeling is that the owners of the fiber are currently losing money on their infrastructure investment, but are keeping the price artificially high (still) hoping that hordes of consumers flock to broadband with the unveiling of the next “killer app” (another dot-com era buzzword) which isn’t even on the horizon yet.
I think a better approach for them to make money is to just give it away for a few years until the critical mass of consumers have signed on, and then slowly ratchet up the price to what the market will bear.
Hmmm… when I was on ISDN that was $50/mo., ISP 30/mon, local cable channels for DirecTV 8/mo. I find at $50/mo the $38 savings is quite a bargain. And here it’s “official” that Comcast gives you free super-basic cable.
"And when will prices start going down? I am talking about prices specifically in the US, as other nations have different pricing policies. "
They invest a whole lot of money. Those free routers/modems/installation guy you get are expensive to them & they have to get back the costs. I once saw a cable modem investment paper & they gave the cost of the modem, installation, lines, routers, equipment, etc & it was something like three years before they got back their costs & then the profit would start.
Prices have recently started dropping in Dallas for DSL. I now pay $30/month for full 1.5Mb service, down from $45-$50/month last year. I never considered $50 expensive, but I do like $30 better…
Digging holes and laying fiber is extremely expensive relative to the price of the fiber itself. So, when you do dig holes and lay fiber, do you lay just enough to cover current demand, or do you lay a huge amount and only turn the fiber on as demand warrants?
To think of it another way: when you lay sewer for a new housing subdivision, do you just lay pipes big enough to handle the current sewage flow for one or two houses, or do you use a pipe big enough to eventually handle the needs of the entire neighborhood?
Also bear in mind that where adequate consumer infrastructure exists, the broadband companies may not have the resources to extend routing to all potential customers. More customers = more ports. Even where those resources exist, or can be brought on line cheaply, rollout may be delayed to maintain the demand that justifies the higher prices. Also bear in mind that the technogy is still buggy, and many people have trouble with their connections – rapidly expanding the customer base will cause customer service to get even worse.
I got DSL from the phone company 2 1/2 years ago and although I am paying CAN$45 a month, that is not much compared to the cost of a second phone line (which was rapidly getting to be necessary). I am regularly getting download speeds of 1 Mbps, sometimes better, although upload is not nearly as fast. The service from the phone company has been–mirabile dictu–superb and one result has been a substantial improvement in my phone service. They have replaced both the line to the house and something they called the protection box, which is the interface between the outside and inside wiring. The line was flaky until they made these changes a year and a half ago and we had frequent interruptions, but we have not had an interruption since. I was never put on hold when I called with a problem either.
In Vancouver I was paying $40 CDN a month for DSL.
In eastern Washington we pay $30 US for DSL, but it’s a special deal that will go up to $40 or 45 after 6 months.
I’ve always just thought it had to do with where you were. Since there isn’t much demand for it here, they can make up whatever charge they want since there isn’t much competition. In the big cities, they need to woo you with better prices.
And when I ask about cable internet here, I just get blank looks.
