Commentary
Report: Lack Of Competition Keeps Broadband Prices High
- by Wendy Davis , Staff Writer @wendyndavis, September 14, 2010
The report, which summarizes research by professor Shane Greenstein, says that broadband prices fell only slightly -- between 3% and 10% -- between 2004 and 2009. That paltry dip is "nothing like the rates of price decrease that characterize the rest of the electronic world," the report states.
The researchers say that a key reason why broadband prices haven't fallen is a lack of competition, adding that most urban markets have just two wireline providers. "If you were in such a market as a supplier, why would you initiate a price war?" Greenstein says in the report.
He adds that after pipes are installed, costs are lower than prices. Therefore -- assuming there was competition in the market -- subscription costs would be expected to fall. "Like many observers, I expected to see prices drop by now and I am surprised they have not," he says.
In 2002, the Federal Communications Commission took steps to classify broadband access as an "information" service, which isn't regulated to the same extent as a "telecommunications" service. Many advocates still criticize that decision, arguing that it resulted in higher prices and slower speeds for consumers.
The FCC now is considering a controversial plan to reclassify broadband access as a telecommunications service, but only to the extent necessary to impose neutrality regulations that would ban ISPs from degrading or prioritizing traffic. In other words, even if the FCC goes ahead with its much-debated reclassification plan, doing so doesn't appear likely to increase competition among ISPs.
Wendy Davis is a Senior Writer at MediaPost. You can reach Wendy at wdavis@mediapost.com
Just today, I read this from Rose Hill Software. It's excerpted from an email about their new DU meter, which lets you see how much of your full bandwidth potential you're actually using.
"Don't confuse "unlimited access" with "unlimited bandwidth allowance". They are two entirely different things. Unlimited access simply means you can stay online 24/7 around the clock for a basic monthly charge. Bandwidth allotment is entirely different and even if you think you have unlimited bandwidth, that may no longer be true or may be changing soon!
"For example, Comcast, the nation's largest cable internet provider has already implemented an acceptable use policy imposing a 250G per month download cap on all accounts. Many other ISP's have followed suit, some with much less generous allowances than Comcast.
"Time Warner Cable Internet is currently experimenting with the imposition of monthly allowances for the amount of data their customers upload and download.... and fees per gigabyte if they go over.
"It's coming folks. Just like airlines are now charging for your bags, Internet providers will likely soon ALL be charging for bandwidth usage, so it's a good to start paying attention to what you use before it starts costing you."
Very disturbing when you're already paying too much for a sluggish connection that you know is nowhere near the "speeds up to" numbers promised.
And for those who love the 2002 policies, if the public is as stupid as we are seeing they are, future policies will provide more backlog and they will love them even more. Isn't it 33% of our population see no need for broadband at all ?
This is correct and on the mark.
Time Warner Cable is the only service provider- Verizon DSL soes not count hence the lack of options for a residential conumer.
The bigger untold story is disruption of service during peak times becuase the cable network is taxed.
During peak times of 7pm to 11pm try video streaming over TWC Roadrunner and you will be disconnected at least a half dozen times which means that your top dollar is not buying broadband services advertised because the node connected to fiber has to be split with a great many coxial cables which lead to your connection.