Why doesn't the price of broadband go down?

[iamme]

Are we looking at the lowest that ISP's will go down? Are there profit margins for cable/DSL access real thin already? Is it just too early?

I think $30 per month would be a real sweet spot to have more people sign up. It'd only be like $9 more that AOL, but a hell of alot faster.

 

[NikPreviousAcct]

Since enough people want/have broadband, there's no reason for the price to go down. If customers are willing to pay the price, the companies are going to milk it. Now... if everyone cancels their accounts, the price will go down until it's too expensive to supply the service at the current cost -in which case the company will go under.

nik

 

[iamme]

so are broadband ISP's raking in the dough with current rates vs. costs? i figure if there's a pretty good profit margin, then there's room for prices to go down later, when less users sign up and/or competition increases. right?

 

[Tripleshot]

Cable and DSL companies are now revising pricing and delivery structure to "give the consumer more options". That is corporate double speak for "we are going to give you less and make you pay more, because we can."

Promises of faster speeds are nothing more than marketing ploy to lure you in, get you contracted, and then change the plan altogether after you are hooked.

Average 56k DUN here is between 15 and 21/mo. 500/128 cable is 30/mo and 500/256 wireless is 70/mo. DSL,if you can get it at all, ranges from 35/mo plus line of 35/mo to who knows what. DSL has distance limits that alter pricing and availble speed. Satillite is an alternative if latency does not bother you, at 70+/mo and a heavy install and equipment fee.

I wonder what,if anything, government is going to do to help regulate this abuse. After all, they( the government) have pushed for and demamnded braodband expansion, but they have done nothing to insure that reasonable and affordable broadband is delivered. As usual, government is long on rehtoric,and short on action. In the meantime, devious and inscrupulous companies like worldcom andothers who where installing fiber all over, are now stalled and progress is in the toilet. Incentive is not there, and threat of strict oversight by government bean counters in the wake of enron and worldcom and others, makes the desire of any company to pick up the ball and continue way flat. People with money will wait until there are better economic conditions to invest in projects to bring technology to market.

They are in the Bahamas waiting out the storm of republican control of the economic condition. when good common sense fiscal responsibility returns, then you may see affordable, reliable broadband service delivered to all Americans. Not until then, I'm afraid.:frown::|:disgust::Q

 

[beer]

Compare broadband rates to the cost of dedicated lines, like T1s.

Furthermore, look how much people download these days. Four years ago, when DSL was $40 a month, Kazaa, Napster, etc., didn't exist. Only the elite downloaded from IRC and FTP. Now, everyone does it. That means more bandwidth costs...which means that even if prices should be down, they aren't going to be anytime soon.

 

[Squisher]

WideOpenWest Cable has tiered pricing:

WOW! Internet Value: $19.95 (Download Speeds Up To 112Kbps)
WOW! Internet Basic: $29.95 (Download Speeds Up To 500Kbps)
WOW! Internet Advanced: $34.95 (Download Speeds Up To 1.5MBps)

No modem fee.

 

[NikPreviousAcct]

Originally posted by: iamme
so are broadband ISP's raking in the dough with current rates vs. costs? i figure if there's a pretty good profit margin, then there's room for prices to go down later, when less users sign up and/or competition increases. right?

Why would companies NOT want to or STOP making a profit!?

nik

 

[ErmanC]

You know, I used to wonder when the cost for 56k would drop. Its still about the same as it ever was.

Now if my cable company reads this and hears me talking about my cable modem, that'll probably be enough to justify jacking it up another $4-5 a month. They just look for excuses to milk every penny they can get out of you. I mean good grief, $75 a month is too much for TV and internet, but I'm hooked.

If I was smart I'd just read a book... but then I'd have to buy a book and I'd probably try to find a HOT DEAL on it or buy it on AMAZON or EBAY with price matching or some nonsense like that. And then I'd logon to Anandtech to post a thread about how I got a great deal on it and how awesome this book was and how everyone should read it. Then I'd get accused of REPOSTING because someone last year mentioned a different book by the same author in an old thread. Worse yet, someone would want pictures and the thread would wind up getting locked for being YABT and folks would accuse me of NEFfing to get my post count up so I could be a diamond member. I might even start getting a bunch of SPAM PM"s from it and then I'd have to send Anandtech a $10 check so I could up my PM limit.

See what you've done? I no more than turn around and you've got me spending an extra $15 a month.

 

[tm37]

Originally posted by: Tripleshot
Cable and DSL companies are now revising pricing and delivery structure to "give the consumer more options". That is corporate double speak for "we are going to give you less and make you pay more, because we can."

Promises of faster speeds are nothing more than marketing ploy to lure you in, get you contracted, and then change the plan altogether after you are hooked.

Average 56k DUN here is between 15 and 21/mo. 500/128 cable is 30/mo and 500/256 wireless is 70/mo. DSL,if you can get it at all, ranges from 35/mo plus line of 35/mo to who knows what. DSL has distance limits that alter pricing and availble speed. Satillite is an alternative if latency does not bother you, at 70+/mo and a heavy install and equipment fee.

I wonder what,if anything, government is going to do to help regulate this abuse. After all, they( the government) have pushed for and demamnded braodband expansion, but they have done nothing to insure that reasonable and affordable broadband is delivered. As usual, government is long on rehtoric,and short on action. In the meantime, devious and inscrupulous companies like worldcom andothers who where installing fiber all over, are now stalled and progress is in the toilet. Incentive is not there, and threat of strict oversight by government bean counters in the wake of enron and worldcom and others, makes the desire of any company to pick up the ball and continue way flat. People with money will wait until there are better economic conditions to invest in projects to bring technology to market.

They are in the Bahamas waiting out the storm of republican control of the economic condition. when good common sense fiscal responsibility returns, then you may see affordable, reliable broadband service delivered to all Americans. Not until then, I'm afraid.:frown::|:disgust::Q

WOW you really just look for anythings to push MORE GOVERNMENT CONTROL on us don't You.

Price in a free market is controled BY 1. demand and 2.supply.
while you may have learned these terms in school it is obvious that you have no idea of the concept.

What they don't explain is things like cost to build the infastructure to provide these services and that cost is HIGH. If a company cannot recoup the costs of building the infastructure then they won't build it. And now with people worried about employment they tend to pay less for unneeded things MANY people have no desire to have broadband and while many here feel it is a nessasity in fact is for the majority of users we could live without it, IT is a luxury. And as with any luxury item there is a huge risk with expanding to a market that may not want or be able to afford that service. IF the government were to FORCE companies to BUILD an unprofitable Infastructure then thoose of us who currently use broadband will see an increase rather than the decrease you claim. The company that builds that infastructure will be forced to raise prices to continue to turn a profit, and while you make think that profit is evil profit is the incentive that drive expansion and development.

Many companies have started to offer lower teired service to try and get thoose that don't want to pay high prices into the broadband realm. Charter for example offers a 256K d/l for just 33 bucks and quest has two levels of service offered to attempt to make it more affordable. the costs associated with the building of this super highway of information will need to be paid for by the consumer and should be paid solely by thoose who use them. Having the governemnt step in and REGULATE what services BB companies can offer will only slow progress and make the service worst for users not better. While allowing companies to grow at there own pace and deleiver services where they are most likely to gain a profit will allow for a more even and fiscally responsible growth.

Asking for congress to step in because you disagree with worldcoms accounting practices is just silly. Have you taken a look at congress's accounting practices? Thoose practices put the worldcoms and enrons of the world to shame.

 

[IGBT]

I can afford it but won't subscribe because it's an overvalued service. Much of the broadband content is gone..shure it's more convenient but I won't throw money at those guys just for convenience. Their need for cash flow will sooner or later drive down the price I hope.

 

[Pastore]

It will not go down in price until a new ISP technology hits big time... think about when dial up isps dropped in price... not really until broadband got big... something to think about....

 

[Angrymarshmello]

Wow, I guess we really can blame anything that goes wrong on the horror that are Republicans

 

[slyedog]

hahahahaha---who are the dumbcrats going to run for president? al gore or the clinton bitch?

 

[JellyBaby]

Mostly lack of competition but partially a lack of consumer demand, high costs to turbocharge the "last mile" of wiring to your home (DSL), and finally screwed up government interference/manipulation in the telecom industry.

 

[Mday]

cuz the companies havent recovered enough money, and they want more. hell, they would charge more if they thought they could get away with it

 

[LiekOMG]

Hmm, fortunately the price of my DSL has gone down - sorta. Back in early 2000 when I first got it, it cost $50 a month for 640/90 - and back then the service was VERY unstable. Sometime during early 2001, they lowered the price to $40 a month, and increased the speeds to like 760/128 or someting along those lines. However, later that year, they brought the price back UP to $50 a month! Oh well, they still only charge me $40 a month (which I still think is a lot, btw), but I guess its a nice bonus of being a customer with for so long.

 

[kgraeme]

Originally posted by: ErmanC
You know, I used to wonder when the cost for 56k would drop. Its still about the same as it ever was.

Now if my cable company reads this and hears me talking about my cable modem, that'll probably be enough to justify jacking it up another $4-5 a month. They just look for excuses to milk every penny they can get out of you. I mean good grief, $75 a month is too much for TV and internet, but I'm hooked.

If I was smart I'd just read a book... but then I'd have to buy a book and I'd probably try to find a HOT DEAL on it or buy it on AMAZON or EBAY with price matching or some nonsense like that. And then I'd logon to Anandtech to post a thread about how I got a great deal on it and how awesome this book was and how everyone should read it. Then I'd get accused of REPOSTING because someone last year mentioned a different book by the same author in an old thread. Worse yet, someone would want pictures and the thread would wind up getting locked for being YABT and folks would accuse me of NEFfing to get my post count up so I could be a diamond member. I might even start getting a bunch of SPAM PM"s from it and then I'd have to send Anandtech a $10 check so I could up my PM limit.

See what you've done? I no more than turn around and you've got me spending an extra $15 a month.

LOL!!!!

 

[Fritzo]

As I work in this field, I can give some insight:

As we all know, broadband has to run over existing communications networks. When the Internet first became popular, the only way to get dialup Internet access was through one of the owners of an Internet backbone. This would set you back $6-$12 per HOUR to use. After some time, some providers would start to wholesale some of their services, allowing local "Ma & Pa" ISP's to become available, offering deals like "Unlimited access for $19-$25/month". After a while, those Ma & Pa ISP's started to outsell the backbone provider's services, so the backbones went strictly wholesale, giving us our cheap dialup and large companies like AOL and Earthlink that we have today (both firms grew out of local upstarts).

This is what needs to happen before broadband comes down to an affordable stage. What's slowing this up is the backbone providers of these services (ie- Cable companies and phone companies) are dragging their feet on providing reasonable wholesale prices. For example, for a DSL account from an average phone company, it'll cost you $49.99 a month (national average). They'll sell you an account in quantity for $39.99 a month, leaving you a measly $10/month profit. As most pencil pushers know, after paying technical staff, support, administrative and equipment costs, you need to make a MINIMUM of 50% over wholesale (100-150% is actually the target zone). So, in effect, you would have to sell the same DSL service that the phone company sells for $75/account to be profitable---and nobody in their right mind would buy that.

So, why are backbone providers dragging their feet on lowering whole prices? Simple....they're all UNDERSELLING their services! It costs them on average $50-$70 per account to maintain a broadband account.....they lose money on each one of us!!!! The phone and cable companies are hoping that you'll buy other services along with their broadband, with the other services subsidizing their losses. For instance, if you buy a cable connection for $50/month, they're hoping you'll also buy cable TV for $35, HBO for $12, and whatever else....allowing them to recoup their broadband costs. This is why they don't want to wholesale, and this is why so many broadband services go under.

Until backbone prices comes down and their business model changes, we're going to be stuck in $ville for broadband for a while. What could throw a monkeywrench in the whole thing is wireless----in theory, wireless access would circumvent the need for phone and cable networks, making them obsolete (and they know this). It'll be interesting watching the developments over the next few years.

 

[iamme]

Fritzo, thanks for the post....that's what i was basically wondering: whether profit margins were too narrow for ISP's to start slashing prices.....or lack of competition allowed the ISP's to make large profits.

 

[Gonad the Barbarian]

WOW you really just look for anythings to push MORE GOVERNMENT CONTROL on us don't You.

Price in a free market is controled BY 1. demand and 2.supply.

A free market doesn't exist when one company has a lock on a certain location, a la electric, phone & cable services. I have one choice when it comes to each of those where I live, to buy from one company or do without. The government is supposed to ensure a free market for consumers.

 

[tm37]

Originally posted by: Gonad the Barbarian

WOW you really just look for anythings to push MORE GOVERNMENT CONTROL on us don't You.

Price in a free market is controled BY 1. demand and 2.supply.

A free market doesn't exist when one company has a lock on a certain location, a la electric, phone & cable services. I have one choice when it comes to each of those where I live, to buy from one company or do without. The government is supposed to ensure a free market for consumers.

But see a free market is not just dependant on compitition rather a perceaved value for a good or service. If the item is a LUXURY item i.e. not a needed item then the government has NO PLACE in regulating the price. It would be akin the the government regulating whet you pay to go to the movies. Companies are at this TO MAKE MONEY which I am sure is pretty much the same reason that most of us go to work. They should be allowed to charge whatever they need and IF you feel that price is too high then you can CHOOSE not to use that service or look into a Wireless choice. TO say thqat the wireless company is GOUGING YOU is just shear folly because IF I could provide the service AND make a MAD PROFIT you would have companies lining up to do it but as Fritzp pointed out they are not. Like it or not broadband is not a NEED but a LUXURY and the governments only place should be allowing customers to recoup losses IF the prodivider does not own up to there end of the contract THAT YOU SIGNED to obtain their services. Believe me when I say the less government is controling your life the BETTER CHOICES you have. No one is forced to use cable TV or the internet so the government should not be involved in the pricing of these services.

 

[wyvrn]

Its not going down because new sales have levelled off. Broadband companies are trying to think of ways to offer slower speeds at reduced prices, for those people that don't want to pay $50/month for internet access. My local telco offering DSL has been advertising this lately. Basically, until more people pay, the cost of bandwidth will remain the same.

 

[iamme]

i wish they'd offer slower speeds for casual users. my father in law wants an upgrade from 56K, but current broadband prices are too high. WOW offers great rates, but isn't available here yet

 

[StageLeft]

Jesus H Christ. WHen did this happen? What I refer to is the fact I'm paying $50/month for my bellsouth dsl. 256kup/1mb+ down. Two years ago I was paying $35 CAN for a cable or dsl connection faster and now the prices have crept up to this. Granted, the US has more expensive broad band (Canada has a nice infrastructure for that stuff), but still. $50 a frigging month!!!! Ah, in the end it's still worth it to me though I know of two people who are still using dial up and one guy said he'd really like high speed but it's too much for him to afford.