11 Comments

Summary:

OECD just released their telecommunications outlook report, which is one monster of a document, that can take up an entire weekend. There will be a longer post sometime this weekend, but for now little nugget: US broadband in terms of prices is not exactly the cheapest, […]

OECD just released their telecommunications outlook report, which is one monster of a document, that can take up an entire weekend. There will be a longer post sometime this weekend, but for now little nugget: US broadband in terms of prices is not exactly the cheapest, which is typically what you should expect when the market is a duoply.

Using the monthly subscriptions, the cheapest broadband plan, according to OECD is available in Sweden: $10.47 a month. US comes in fourth at about $15.93 a month, which is hardly a surprise given cheap DSL offers from Bell Operators. However, price per megabit per month is where US is woefully behind other countries. In Japan consumers pay 22 cents Mbps per month, which Americans pay $3.18, about 15 times that. US ranks #13 by prices.

The worst comparison is in the newest and shiniest broadband technology: Fiber. In Japan NTT residential connection (100 Mbps down/up) costs $49 a month. In US, Verizon FiOS (30 megabits down/5 megabits up) costs $191.20.

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  1. Mark Williamson Friday, July 13, 2007

    I just paid my Time Warner High Speed Internet bill. It was $59.00. I’m getting ripped off.

  2. Tom Coseven Friday, July 13, 2007

    Om, I think you missed the point of the OECD chart. It’s a range. You can get 5 gallons of mustard at Costco for a lot cheaper per ounce than 6 ounces of mustard at Safeway. But the price of 6 ounces of mustard at both stores is not that different. I ran a study about a month ago on the price of mid-range broadband (5-8Mbps) worldwide. Almost everywhere it fell into the $40-%50 range, including Japan and South Korea.

    http://www.ocn.ne.jp/english/personal/broadband/flets/

    The problem the US has is at the high-end. Japan kicks our (and everyone else’s) butt on fiber deployment. More importantly, the price at the very high-end is a lot less than FiOS. Verizon is selling 5 gallons of mustard at the 6 ounce price/ounce.

  3. alas the truth on broadband in the US, too expensive.
    What could make the prices go down ?
    competition?
    FCC incentive?

  4. If they are so good at providing low cost service why have they not penetrated the US market with their amazing offerings? I hear people bemoaning the low broadband penetration rates in the US, come and get it Japan bring your low cost great service here. Sweden, we want broadband for cheap and you can offer it, bring it on.

    They can’t do it and there are many reasons why the same ones Verizon and the others face. One primary reason is Verizon is not subsidized by the government(or much less so)

  5. Om, after seeing you at PANIIT its a different feeling when I go through your posts. Frankly you dont seem as young as you seemed before.

  6. William Woody Friday, July 13, 2007

    It’s all about population density.

    According to Wikipedia, the United States population density is 31 people per square mile. Japan, 339 people per square mile. Makes sense Japan would have much better and cheaper high-speed broadband access than the United States; it’s cheaper to run fiber when everyone is in one location.

  7. Tom Coseven Friday, July 13, 2007

    Woody, if it were just density, then dense US cities (and around the world) would have similar fiber penetration to Tokyo.

    The big motivator for fiber deployment in Japan is policy. The unbundling rate for copper in Japan is artificially low (just over $1 USD). The unbundling rate for fiber is aritificially high (about what NTT sells it for retail). Every copper line NTT retires (tears out) is a line that cannot be used to compete against NTT. To compete with NTT on price, Softbank/Yahoo!BB and J:COM need to run their own fiber.

  8. Jay Srinivasan Friday, July 13, 2007

    This is a shame, and us Americans have realized it for some time now. Not sure what can be done about it, just one of those sad realizations. The price per mb is where the truth lies because nobody I know wants to pay $15 a month for < 1 Mbps DSL speeds.

    To get a decent connection it costs between $30-60 a month, not to mention fiber. From the looks of it, seems like fiber is only going to exacerbate the situation.

  9. It’s a mistake to generalize in a country like the United States, where rates and bandwidth show significant variation from region to region, and even within states. I am getting 5/2 mbps fios service for $30/month for the first six months, and $40/month for the 18 months following. It’s not available in many neighboring towns, where people pay similar rates for slower coaxial-delivered pipes.

    And yes, it’s expensive compared to Japan, but considering I was paying $10/month for 45kbps dial-up earlier this year, fios seems like a pretty good deal, on a bps/$ scale.

  10. Adam Mesenbrink Saturday, July 14, 2007

    There are 3 very good reasons for this and it’s not the providers fault.

    1. Physical Size of the country.
    2. Population density.
    3. Government subsidy.

    I don’t want to live in a smaller country, live closer to my neighbor, or pay higher taxes. I’ll pay more, Thank you very much. 3MB down 512 up, DSL for $25.00 / month, I’m not going to complain. I know many people that have no broadband at all just a few miles from me here in the Central US.

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