Higher Prices, Recession Can't Stop Broadband Growth Though data again highlights a lack of competition... Wednesday Jun 17 2009 12:44 EDT The latest data from the Pew Research Center's Internet & American Life Project indicates that broadband adoption continues to surge despite the troubled economy and higher prices, as broadband becomes less of a luxury and more of a necessary utility. According to the outfit's findings, 63% of adult Americans had broadband as of April 2009, a number that's up from 55% in May 2008. Growth particularly surged among older, rural and low income Americans, though it slowed among African Americans. Of particular interest in the Pew findings is the fact that broadband prices continue to rise for consumers at the same time that the cost of delivering broadband continues to drop. According to Pew data, the average monthly bill for broadband service in April 2009 was $39, an increase from $34.50 in May 2008. Of course speeds are rising as well, though just 34% of users signed up for them. The average bill total jumps to $44.70 for users with access to just one provider (Pew says that's 21% of Americans). In markets where consumers have more than one provider (69% of all Americans), the average price for a broadband connection was $38.30. In markets that see four or more competitors (an honor bestowed on just 17% of consumers), the average price of a connection drops to $32.10. In other words, consumers in single-carrier markets pay $536 yearly on average, while consumers in competitive markets pay $385. Duopoly and monopoly markets give carriers the luxury of engaging in non-price competition. While carriers do compete with promotional bundles, quite often these are designed to provide the illusion of value instead of value itself. Such bundles also tend to punish users who desire standalone broadband -- by charging users substantially higher prices when they don't take additional services. For some global contrast, the latest data from Point Topic suggests global broadband prices are 37.5% lower than last year. Fiber and cable prices have dropped 20% and 30% respectively, with global citizens paying, on average, $1.25 per megabit per second for fiber and $5.65 for cable. But while France, Germany, the UK and Asia are seeing these drops, U.S. consumers aren't, something Point Topic blames on limited competition. The data collectively pokes more than a few holes in the recent claims by Verizon lobbyists that the broadband market is perfectly competitive. Not too surprisingly, a Verizon blog post discussing the Pew study glosses over the fact that so many consumers don't yet see competition. Of course Verizon also likes to pretend they haven't spent millions preventing under-served communities from wiring themselves with broadband, and that they haven't fought efforts to increase broadband competition at every turn. Meanwhile, Pew finds that only 7% of Americans are dial-up users, a number Pew says has been cut in half the last few years. When asked what would get them to switch, 32% of dial-up users stated they want lower prices, while 17% cited a lack of availability. 20% of dial-up users continue to insist nothing would get them to sign up for broadband. 4% insist that the Internet is simply a waste of time, while 4% insist they're simply too busy to use broadband. On the plus side, you can call them all busy, grumpy Luddites and they can't hear you. |
winsyrstrifeRiver City Bounce Premium Member join:2002-04-30 Brooklyn, NY |
AT&T / Time Warner reply:This data regarding lower prices in relation to competitive markets is utter nonsense. | |
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vzw emp
Anon
2009-Jun-17 6:01 pm
Re: AT&T / Time Warner reply:said by winsyrstrife:This data regarding lower prices in relation to competitive markets is utter nonsense. No, I can attest to the fact that it is true (at least in Columbus, Ohio). Depending on where you live, we have a choice between AT&T, Time Warner, WOW and Insight. One of those companies usually comes with a better deal once they hear you are also considering signing up with one of their competitors. The bad news is that the statement that ISP's give lower prices according to what else you bundle with it is also true. I can order internet through my local provider, Insight, for $45/month as a stand alone service. However, if I choose to add digital cable then I'll get the same internet service for $30/month. So, in effect, I've got to spend $80 in order to get my $30 internet service. That isn't an issue if you were going to pay for cable service anyhow, but if you have Dish or DirecTV or just don't want a pay TV service then your kinda getting screwed. | |
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XBL2009------ join:2001-01-03 Chicago, IL |
XBL2009
Member
2009-Jun-17 12:55 pm
When will we get real broadband at prices we can afford?I want to wake up one morning and read that at&t and Comcast have gone bankrupt. | |
| | FFH5 Premium Member join:2002-03-03 Tavistock NJ 2 edits
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FFH5
Premium Member
2009-Jun-17 12:56 pm
Re: When will we get real broadband at prices we can afford?said by XBL2009:When will we get real broadband at prices we can afford? I want to wake up one morning and read that at&t and Comcast have gone bankrupt. And exactly how will that get you broadband you can afford? | |
| | | XBL2009------ join:2001-01-03 Chicago, IL |
Re: When will we get real broadband at prices we can afford?said by FFH5:said by XBL2009:When will we get real broadband at prices we can afford? I want to wake up one morning and read that at&t and Comcast have gone bankrupt. And exactly how will that get you broadband you can afford? If there was a real competitor to cable and telephone neither at&t or Comcast could get away with the price that they charge. Those fat profits that they are hording now would disappear. Imagine 100mbps for $25 instead of $155!!!! | |
| | | | FFH5 Premium Member join:2002-03-03 Tavistock NJ |
FFH5
Premium Member
2009-Jun-17 1:20 pm
Re: When will we get real broadband at prices we can afford?said by XBL2009:said by FFH5:said by XBL2009:When will we get real broadband at prices we can afford? I want to wake up one morning and read that at&t and Comcast have gone bankrupt. And exactly how will that get you broadband you can afford? If there was a real competitor to cable and telephone neither at&t or Comcast could get away with the price that they charge. Those fat profits that they are hording now would disappear. Imagine 100mbps for $25 instead of $155!!!! But that doesn't answer the question on how AT&T & Comcast going bankrupt will bring more competition. | |
| | | | | winsyrstrifeRiver City Bounce Premium Member join:2002-04-30 Brooklyn, NY |
Re: When will we get real broadband at prices we can afford?It might for a short time. Some local competitors which have been strongarmed by AT&T / Comcast may be able to provide profitable services once those entities are gone. More likely than not, however, they would also begin raising prices at an abnormal rate, once they've settled into their role as the primary game in town. Meet the new boss. | |
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| S_engineer Premium Member join:2007-05-16 Chicago, IL |
to XBL2009
said by XBL2009:I want to wake up one morning and read that at&t and Comcast have gone bankrupt. That will only exacerbate current problems. However, since a significant number of the megacarriers have proven that they neglect forecasts about growth, maybe it's time to regulate broadband as a utility which would serve several purposes. 1) the neccesity for raises in rates could be verified through an independant PUC type of body. At a time when the delivery of broadband is dropping, carriers could even be doing upgrades with prices remaining stagnant. 2) define the implementation or size of a cap as cost to also be verified through the regulatory body. Smaller ISPs could even get help via the gov to bring them to par if the gov were to set the bar too high. Now, I'm not a big fan of gov jamming regulations down businesses throats. But alot of these companies left on their own gouge worse than any oil company could ever imagine. And if nobody tolerates oil companies gouging, then why is TW gouging acceptable? These are ideas that alot of you won't like, so if you've got better I'm all ears. | |
| | | markofmayhemWhy not now? Premium Member join:2004-04-08 Pittsburgh, PA |
Re: When will we get real broadband at prices we can afford?I have always, always been against government intervention of commodities. I still see broadband as a commodity, but my view on its delivery has changed very much over the last decade. I actually agree that information deliery should be a utility. I am quickly agreeing that the government should pay for, instal, and maintain a FTTH network that private corporations can sell products "on". I agreed with the notion in the '40's and '50's that public funds should promote and up-keep a national road system for the flow of goods to promote capitalism. I believe the "internet" should be our generation's Eisenhower Interstate. | |
| | | | S_engineer Premium Member join:2007-05-16 Chicago, IL |
Re: When will we get real broadband at prices we can afford?said by markofmayhem:I have always, always been against government intervention of commodities. I still see broadband as a commodity, but my view on its delivery has changed very much over the last decade. I actually agree that information deliery should be a utility. I am quickly agreeing that the government should pay for, instal, and maintain a FTTH network that private corporations can sell products "on". I agreed with the notion in the '40's and '50's that public funds should promote and up-keep a national road system for the flow of goods to promote capitalism. I believe the "internet" should be our generation's Eisenhower Interstate. Eisenhowers interstate was'nt built for the convienence of drivers though. That capitol development had a dual purpose. It was a way to move troops throughout the US in case of Soviet attack. You have to remember the paranoia of the 50's was a staple in gov before the MAD mentality took hold. Currently, your idea could be viewed as an investment in the future of our economy, which is equally important. | |
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Re: When will we get real broadband at prices we can afford?Eisenhowers interstate:
Also had the purpose of Air Force bomber landing runways. One mile in every 5 had to be perfectly straight. Essentially they made 5 mile chunks of straight and the other 20 (of a 25 mile segment) were allowed to be more curvy. 5 mile runway will handle a B52 | |
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| | | me1212 join:2008-11-20 Lees Summit, MO |
to markofmayhem
Could you elaborate on that more? Like do you mean comcast verizon and tw could all offer tv over said FTTH and the costumer could choose which one has the best package(s) for them, same with ISPs and VoIP companies? | |
| | | | | S_engineer Premium Member join:2007-05-16 Chicago, IL |
Re: When will we get real broadband at prices we can afford?I don't know if he meant FTTH, or the idea of splitting the nations telecom infrastructure in 2 that some one suggested yesterday in here. One would be a physical plant possibly owned by gov which would in turn lease the lines to competitors giving everyone the same footing. There are numerous conflicting laws and practices that would have to be addressed as well laws intervening into private property. However, I think it's becoming apparent to many that the status quo is rapidly becoming unacceptable. Any dialogue in this respect is good because now it seems these stories are becomming mainstream, not just here at BBR | |
| | | | | | me1212 join:2008-11-20 Lees Summit, MO |
me1212
Member
2009-Jun-17 3:33 pm
Re: When will we get real broadband at prices we can afford?He said: "I am quickly agreeing that the government should pay for, instal, and maintain a FTTH network" | |
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| XBL2009------ join:2001-01-03 Chicago, IL |
Going bankrupt doesn't always mean you go out of business.
It just means you don't get to roll around in obscene profits while refusing to upgrade your lousy over priced service. | |
| | POBRes Firma Mitescere Nescit Premium Member join:2003-02-13 Stepford, CA 1 edit |
to XBL2009
said by XBL2009:I want to wake up one morning and read that at&t and Comcast have gone bankrupt. Actually, I'd like to see the kind of competition there was among ISPs back during the dial up days -remember when anyone with half a brain could become an ISP- Those were the days when there was true competition. So much so that it forced providers such as AOhell to modify its screw-you-by-the-minute business model to flat rate pricing. Now (assuming you live in a duopoly market) it comes down to a choice between cable providers such as Comcrap that are out to screw over consumers by hook or by crook, and telcos like the Death Star that cry poverty while surrendering your private data to Big Brother. | |
| | | me1212 join:2008-11-20 Lees Summit, MO |
me1212
Member
2009-Jun-17 2:57 pm
Re: When will we get real broadband at prices we can afford?It would be nice to have that kinda competition again. | |
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me1212 |
me1212
Member
2009-Jun-17 1:00 pm
More proff that we need competiton.Those in a monopoly area pay $44.70 on average, and those with 4+ pay $32.10 on average. Thats over $12 less a month. | |
| | FFH5 Premium Member join:2002-03-03 Tavistock NJ 1 edit |
FFH5
Premium Member
2009-Jun-17 1:06 pm
Re: More proff that we need competiton.said by me1212:Those in a monopoly area pay $44.70 on average, and those with 4+ pay $32.10 on average. Thats over $12 less a month. And if that disparity in prices persists that will draw in competitors to the overpriced areas. | |
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Re: More proff that we need competiton.It can't, not with franchise agreements in place. Not to mention the large carriers have economy of scale on their side. | |
| | | | FFH5 Premium Member join:2002-03-03 Tavistock NJ |
FFH5
Premium Member
2009-Jun-17 2:11 pm
Re: More proff that we need competiton.said by sonicmerlin:It can't, not with franchise agreements in place. Not to mention the large carriers have economy of scale on their side. Your 1st point is invalid. Exclusive franchise agreements are illegal. Nothing prevents a competitor from going in and getting a franchise in an existing area and overbuilding. Your 2nd point is entirely accurate. It is hard to move in to existing areas and undercut the prices of the national providers like Comcast, TWC, AT&T, Cox, etc. But it can be done. | |
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Re: More proff that we need competiton.What do you mean? Municipalities frequently grant franchise agreements to cable companies. There have also been many stories on this site about DSL or cable companies preventing municipalities from building their own networks. | |
| | | | | | FFH5 Premium Member join:2002-03-03 Tavistock NJ |
FFH5
Premium Member
2009-Jun-17 3:56 pm
Re: More proff that we need competiton.said by sonicmerlin:What do you mean? Municipalities frequently grant franchise agreements to cable companies. Sure, they grant franchises. But they are no longer EXCLUSIVE, like they used to be 15 years ago. By FCC decision, franchises can NOT be exclusive and shut out competitors. | |
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to FFH5
said by FFH5:And if that disparity in prices persists that will draw in competitors to the overpriced areas. not likely and unsupported by facts. I have been in a monopoly market, paying that extra $12/mo, for several years. - the barrier to entry to the market is very high because the lack of line sharing means any new entrant must overbuild. - Having to overbuild means deep pockets and likely little or no profit in the first few years of operation; note the current incumbents didn't have this issue because they were granted govt monopolies initially; also, any new entrant would be susceptible to being forced out of the market in short order by the incumbent underpricing service for just long enough to force the new entrant to go bankrupt or leave the market - having to overbuild means it is EXTREMELY unlikely a market would get more than one new entrant, leaving a duopoly market, better than a monopoly, but not much. the U.S. broadband market is not competitive and is unlikely to become competitive in the near future. at the current time the govt has no stomach for taking the steps required to create a competitive market. the broadband stimulus plan will likely be a colossal failure and a huge waste of money. | |
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Yes, because ever since they have gutted the 1996 reform act the competition has just flourished hasn't it?
Though I won't debate with you because your pro-business view from that pile of sand you have your head in prevents you from even seeing there is a problem to begin with.
Barrier of entry and networks that were built on the backs of the people they serve (or more appropriate, dont). - That is all I need to say about both the telecom and cable companies. | |
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FFH5 Premium Member join:2002-03-03 Tavistock NJ 1 edit |
FFH5
Premium Member
2009-Jun-17 1:00 pm
If BB rate is up & prices up; then prices aren't too highIf the rate of broadband adoption is up & rising while prices are up, then I guess that is proof that prices aren't too high. In fact prices should be raised in order to maximize profits.
1st rule of a successful business: - keep raising prices until your growth rate slows and your customers start going to competitors. | |
| | jmn1207 Premium Member join:2000-07-19 Sterling, VA
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jmn1207
Premium Member
2009-Jun-17 1:22 pm
Re: If BB rate is up & prices up; then prices aren't too highIt could be more complicated than that if one considers that perhaps broadband service is becoming more of a necessity for an increasing number of people. It's certainly far from clean water or electricity, but each year we get closer to seeing broadband becoming a crucial service for a growing number of people. Broadband is becoming a very important resource for an ever increasing population, and possibly these corporations are simply reaping the benefits and taking advantage of the situation?
Perhaps the supply/demand model is not perfect when considering that a percentage of this growth is based off need and not merely privileged convenience. The price may not have as much of an impact than it otherwise would if this were exclusively a luxury service. This is one of the biggest issues when dealing with a service that falls somewhere between a comfort and a requirement, as dictated by individual circumstances. | |
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to FFH5
I think the data has already demonstrated a lack of competition is what has allowed businesses to raise their rates without customers going to competitors. That's why areas with 4 or more providers have such low monthly rates. In areas with less providers, there is more collusion. | |
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to FFH5
said by FFH5:... 1st rule of a successful business: - keep raising prices until your growth rate slows and your customers start going to competitors. you keep pretending there is competition. the majority of the U.S. market has little or no competition. if there is no competition, there is nowhere to go. the choice is keep paying the higher price or drop broadband. to me, it's very telling that comcast (my provider) hasn't raised broadband prices since I got it (whereas cable TV price increases like clockwork) - to me, that says they priced it as high as they could years ago and since their profit increases every year because of the declining cost of bandwidth and equipment, they don't feel the need to increase prices even in areas with no competition. | |
| | C0deZer0Oc'D To Rhythm And Police Premium Member join:2001-10-03 Tempe, AZ |
to FFH5
That's assuming that some of the people currently being served actually have a choice for a competitor. To all those that say that broadband internet is a commodity, I say... "Well, so was running water and POTS service a century ago, too." Internet access now is about as crucial to business (and personal use) as delivery of clean drinkable water was back when this country was being first settled. And nowadays, in order to be able to access (or share) the types of content being shared on the internet nowadays, you would need broadband level internet access with which to be able to just keep up. I still remember how painful it was just to even download Service Pack 2 for Windows XP when that came out, since at the time I was suffering through still on just dialup. In short, nearly a full week of lost productivity because of time-outs in mid-download and having to restart the download ad nauseum every time the phone was needed for something else. In all that time, the line was pretty much open to get any other kind of nasty surprise along the way as well. | |
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DaveDudeNo Fear join:1999-09-01 New Jersey |
upcoming inflationI want to see how this winds up when inflation hits in the fall. We are going to see the biggest inflation ever seen. | |
| | ••••• | MTU Premium Member join:2005-02-15 San Luis Obispo, CA |
MTU
Premium Member
2009-Jun-17 2:11 pm
NecessitiesSomeone mentioned water bills. I live in an unincorporated area of the county where drinking water comes from one of three providers, based upon address. One is a community service, the other two are private companies. "My" private 'international' water service (& the other private company) has increased rates every six months without PUC interference. The community agency has not raised rates. The water is the same (all drawn from community-area wells).
The difference? Them damn socialists in the community agency.
I'm proud to be gouged by the internationalists and do my part to keep corporations in their rightful place at the top of the food-chain. | |
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Re: NecessitiesAre you kidding? If you're being sarcastic it's not quite getting through.... | |
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In Qwest/Comcast duopoly areas...The cheapest dry-line broadband is $40/month for 1.3/700 (1.5/896 - 15% overhead). That's Qwest DSL. Then there's $46 for either 3, 5 or 7 Mbit (minus 15%) depending on where you are. If you want a 1 Mbit of upload you pay $55 for 6/1 from Comcast. For 2 Mbit you pay $65, for 8 Mbit down. Here, as long as TWC doesn't cap things, the situation is actually a little better, even with a monopoly . 768/128 for $20, 5/384 for $35, 7/512 for $40, 15/2 for $50. Not sure why, but TWC's prices are not too bad, though if they don't serve your address you're screwed as far as HSI is concerned. | |
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33358088 (banned)
Member
2009-Jun-17 4:14 pm
when the price rises about what it costs to buy somethingthats when broad band goes away.
were already seeing a 300% price increase in Canada and all that doe sis take out the disadvantaged and poorer people ( majority) off the net. YOU can propagandize this all you want this article is flawed and wrong.
YOU DO NOT RAISE PRICES IN A RECESSION. | |
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I'm for regulation.OF GAS PRICES, especially during the summer driving season.. these commody industries should NOT be allowed to use the calendar to base price hikes. I wish I could do that on my job... well, employer.. it's June, so the price for my services has gone up 20% and you have NO CHOICE but to pay up. Since we're not regulating OIL, we're doing the next best (or worst, depending upon your perspective) and forcing the US auto industry into bankruptcy/bailouts & requring them to get back on track with fuel efficiency and making products that LAST. There's a reason why a $30,000 automobile made good old usa from Ford/GM has only a 3-year warranty.. because it was made like crap.
Broadband while, not as necessary.. also is showing a lack of competition. the Big-3 At&t, Verizon & Comcast have shown no interest in doing right by the consumer as each company has in place policies that force customers looking elsewhere for a competitive product and are not finding it because they are in monopoly and duopoly hell. Don't like caps, pay more, dont' like paying more, deal with caps. That's a NO-WIN scenario for the consumer, or still worse end up in a place with sleazy DSL. | |
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though it slowed among African Americans.though it slowed among African Americans. what does that have to do with the article? ...talk about an odd out of place phrase. | |
| cork1958Cork Premium Member join:2000-02-26 |
cork1958
Premium Member
2009-Jun-17 9:17 pm
Got to keep up with the Jones'People are willing to pay more for the max speeds just to play keep up with the Jones'. They're brain dead anyway!!
It may be almost as much a necessity as a luxury now a days, but I WILL NOT pay more than I am currently and it will be the first thing to go, if I come across that bridge.
I've always said since the first day high speed internet came around here I would not pay more than $40 and I'm still under that.
Even at that, it's ridiculous!!
Kind of like what they were talking about on the news last night about how phone carriers are WAY overcharging for text messages, but people are still stupid enough to keep right on texting!!
Is it any wonder the economy is in such shape with so many brain dead people around who just can't see passed the end of their nose? | |
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Re: Got to keep up with the Jones'said by cork1958:People are willing to pay more for the max speeds just to play keep up with the Jones'. They're brain dead anyway!! It may be almost as much a necessity as a luxury now a days, but I WILL NOT pay more than I am currently and it will be the first thing to go, if I come across that bridge. I've always said since the first day high speed internet came around here I would not pay more than $40 and I'm still under that. Even at that, it's ridiculous!! Kind of like what they were talking about on the news last night about how phone carriers are WAY overcharging for text messages, but people are still stupid enough to keep right on texting!! Is it any wonder the economy is in such shape with so many brain dead people around who just can't see passed the end of their nose? no we are trying to move ahead to the Jetsons ! and btw, i knew cell phones were a pile of a shit from day one. it was the first example of how easy it is to con so many people into using something and overpaying for something they dont really need as much as they think. =( but Internet thats a different story, we many not NEED it, as it is just a convenience, but it sure helps the way of the world these days. so companies figure they can start screwing us there too since they knew we will use it anyway .. the difference between those two is , you can throw away your cell phone... wait til you are in the privacy of your own home and use your phone .. ( unless for business of course ) .. and its not just as easy for most to just throw away the Internet .. too bad companies may see us in the same way on both accounts =( facebook, msnaholic, txt,n,hotmail, flash gaming, pod,n useless junkies -- which is what i see way too much when im out in public. | |
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Data as a UtilityData is not a necessity, if your workplace requires you to have online access that's their business and should be their responsibility to provide it. Everyone is so worried about having the fastest, let's have dial up as a utility. I hear they're pretty cheap. | |
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