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Romney2012Defeat Obama 2012-Chg we can believe inPremium
join:2002-03-03
USA
kudos:4 | Flat prices can be explained by devalued dollar There is a real easy explanation for flat prices in the US. The value of the dollar has dropped approx 11% over the last 3 months compared to a basket of other currencies. By holding prices flat, it means that US broadband providers have actually absorbed a 11% price cut due to the lower value of the dollar, when compared to foreign figures.
»money.cnn.com/2009/06/04/markets···ndex.htm
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|   funchordsHelloPremium,MVM
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kudos:5 | Re: Flat prices can be explained by devalued dollar Have you or I or anyone else got an 11% price cut? If not, then your ultimate conclusion -- although very thoughtful -- is incorrect.
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| | | | Re: Flat prices can be explained by devalued dollar said by funchords:Have you or I or anyone else got an 11% price cut? If not, then your ultimate conclusion -- although very thoughtful -- is incorrect. Price cut for WHAT EXACTLY? Overall cost or cost per mbps? The article is about cost per mbps.
said by article :
Internet service providers are offering faster DSL connections for the same price in a battle for market share: Per megabit per second, prices are now 37.5 percent lower than last year, according to market research company Point Topic.
I've gotten a 50% data RATE increase, so my cost per megabit per second has gone down.
$54 for 10 mbps = $5.40 per mbps
$54 for 15 mbps = $3.60 per mbps
That's a 33% cost decrease for me per mbps. | |
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1 edit | said by Romney2012:By holding prices flat, it means that US broadband providers have actually absorbed a 11% price cut due to the lower value of the dollar, when compared to foreign figures. Prima facia that statement makes sense, but because all of their residential customers are within the US, the exchange rate the of the dollar doesn't affect them when dealing with US customers.
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| | Romney2012Defeat Obama 2012-Chg we can believe inPremium
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USA
kudos:4 | Re: Flat prices can be explained by devalued dollar said by NetAdmin1:said by Romney2012:By holding prices flat, it means that US broadband providers have actually absorbed a 11% price cut due to the lower value of the dollar, when compared to foreign figures. Prima facia that statement makes sense, but because all of their residential customers are within the US, the exchange rate of the dollar doesn't affect them. It does affect them. These companies pay more for equipment purchased overseas(almost everything is made in Asia); outsourced services(like call centers in India); borrowed funds to finance capital budget; etc due to the lower value of the dollar vs where they are getting these products & services. So their real costs are rising while holding prices to customers flat in the US.
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1 edit | Re: Flat prices can be explained by devalued dollar said by Romney2012:It does affect them. These companies pay more for equipment purchased overseas(almost everything is made in Asia); outsourced services(like call centers in India); borrowed funds to finance capital budget; etc due to the lower value of the dollar vs where they are getting these products & services. So their real costs are rising while holding prices to customers flat in the US. Then that isn't an 11% cut in revenue, that is an 11% increase in the cost of purchasing equipment. There is a difference.
The exchange value of the dollar doesn't affect the value of the dollar when both parties are using the dollar, only when the parties are exchange currencies.
I fixed my previous statement to make it clearer.
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1 edit | Re: Flat prices can be explained by devalued dollar said by NetAdmin1:The exchange value of the dollar doesn't affect the value of the dollar when both parties are using the dollar, only when the parties are exchange currencies. I fixed my previous statement to make it clearer. totally incorrect; if such a statement were true, then inflation and hyper-inflation would never happen....I need point no further than the Weimar Republic to show that your point is completely fallacious; they were dealing with only transactions with themselves, and the value of the currency was incessantly changing.
The problem is worse than LiamJunket has stated, in my opinion; the government's CPI is horrendously flawed and is tweaked every now and again to make inflation appear to not be as bad, and not only that, but if the dollar is inflated by, say, 5%, a number of other currencies are inflated by, say 5% or even 7%, then it'll actually make the dollar appear to have the same value, or, in some cases, it'll make it appear to have strengthened.
I'm not happy with the lack of competition amongst broadband providers, but I don't think more government funding and regulations are the answer.....the FCC IMHO needs to be tore down, slowly, and private property rights need to be restored...none of this buying rights to an area, city, etc crap.
that said, considering inflation, and the speed increases, I'd say that the price of broadband isn't the greatest, but it's not quite as terrible as this article makes it out to be. | |
| | | | | | | Re: Flat prices can be explained by devalued dollar Whatever you are going on about doesn't deal with the criticism at hand - simply put that LiamJunket's statement that providers ate an 11% price cut due to the 11% drop in value of the dollar doesn't hold water.
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| | | | | | | |  Re: Flat prices can be explained by devalued dollar
when the dollar's value drops in terms of other foreign currencies, it means that imports are more expensive and exports are cheaper...this means more expensive equipment that ISPs must buy (not always, but usually).
That said, in the broadest sense, if the currency's value drops in relation to its previous value, then the price of everything will go up, including the cost of services; if a company, however, doesn't raise their prices, they're eating it somehow, either by paying employees the same (or less), laying off people, cutting other services that aren't necessarily used as much, cutting into the profit margin, not expanding as much, etc.
the point he (and I to a certain degree) is trying to make is the value of the dollar has dropped, but prices haven't increased by the same proportional amount. | |
| | | | | | | | | Re: Flat prices can be explained by devalued dollar said by Fox McCloud:And why doesn't it? We're talking about the value of the dollar, which effects every transaction; foreign, local, national, etc. To varying degrees, that is true, but both you and Liamjunket overestimate the amount that the exchange rate influences the rate of something like internet service. The impact of the dollar dropping 11% has a negligible impact on the costs of delivering a service like broadband. While the cost of equipment is a large cost by the measure of the average person, it is not the largest cost by far. Additionally, the items most sensitive to change in exchange rates, things like equipment, are largely in place. In the last three months a company like Verizon will not have purchased or replaced an amount of equipment that is sizable enough to cause them to eat an 11% price cut. The largest costs to an ISP, bandwidth and people, are those least affected by changes in exchange rates.
Additionally, one could argue that any loss experienced now by the drop in the value of the dollar has largely been erased by the last few years of having a strong dollar.
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| | | | | | | | | | Re: Flat prices can be explained by devalued dollar I couldn't have explained it better myself Netadmin. Well said. | |
| | | | | | | | | | we've had a weak dollar the past few years, not a strong one; it hasn't been semi-decent in the mid to late 90's (even the, it was iffy).
In any event, I made some other points as well, and did not merely chalk it all up to equipment costs, I merely said it adds to it. | |
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| | | | The master of misdirection has returned. | |
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| | | It affects them in the sense that the dividend payouts to shareholders are relatively lower compared to other currencies, which is why prices haven't fallen. | |
| | | | | Re: Flat prices can be explained by devalued dollar said by TransitJohn:It affects them in the sense that the dividend payouts to shareholders are relatively lower compared to other currencies, which is why prices haven't fallen. Absolutely, but that's another issue entirely. 
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| | | Yea, way to try and confuse the issue. NOT WORKING. | |
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1 edit | Re: Flat prices can be explained by devalued dollar Not you. Sorry. The poster BEFORE you, LiamJunket. | |
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