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Summary:

Latest data from Point Topic, a broadband research firm, shows that broadband prices are down by 50 percent on per megabit basis from 2008. Price declines, are being driven by competition, especially for DSL services which are struggling to keep pace with fiber and cable offerings.

broadbandpricesfall

In 1995, when I first got a broadband connection – a 128 Kbps ISDN connection, I paid gobs of money. Today, I pay $35 a month for a 100 Mbps connection, thanks to my local independent ISP, WebPass. In the fifteen years that have passed, broadband connections have certainly gotten faster – much faster and in fact cheaper. And no, I don’t mean my personal connection.

The latest data from Point Topic, a broadband research firm, shows that broadband prices are down by 50 percent on per megabit basis from 2008. (See chart) The price declines, are being driven by competition, especially for DSL services which are struggling to keep pace with higher speeds of fiber and cable (DOCSIS 3.0) based competitors.

That is certainly the case – in the U.S., AT&T has price packages that start at $20 a month – good enough for the company to attract people who don’t need full on broadband (or don’t have a choice of a broadband carrier.) Ironically, despite the low price, it managed to get only 210,000 new broadband subscribers in the fourth quarter of 2010.

Worldwide, DSL is still growing, mostly in new telecom markets that want lower cost solutions. These new markets are very price sensitive. However, in the future things are going to change especially as the Internet starts to become more video centric and more immersive, as some of the recent trends indicate. At that point, the advantage is going to be with the lower-cost-per-bit solutions such as fiber.

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  1. Ganesh @ AnandTech Tuesday, February 1, 2011

    Om, WebPass’s link is web-pass.com and not webpass.com as linked above. Please do the needful :)

    Down south in Sunnyvale, we also have Sonic ‘reselling’ DSL from AT&T. They have a 20 Mbps uncapped service for $40, but insist on bundling it with a landline service (and its added taxes) to the disappointment of many.

    Despite lowered broadband costs, I am a bit worried about the lobbyists bringing in usage-based billing similar to what is being introduced in Canada right now.

    1. Good catch, Fixed the link!

      On the usage-based billing, I share your fears as well.

  2. In the long run people might choose to pay for better latency, not just bandwidth. Gaming,Interactive video, Gambling and 3D are areas in which a lot of money resides.

  3. I envy your connectivity Om. I’m currently on a 10 Mbps Comcrap connection that is spotty and unreliable. Granted, I’m getting the connection for free (me and my fiancée live with her dad so he pays for the internet lol). Just curious, what’s the upload speed on your connection?

    1. I typically get about 30-40 Mbps upload so i am live the bi-directional broadband lifestyle. I think in two years this will be standard for many parts of the world, though I am not so sure about the US where we have penny pinching service providers like Time Warner Cable.

  4. Agreed. But is there a bottom? I think you bull in 2014 for data would be higher than 2011. Here’s why..

    1) Going to metered vs flat rate. Much like wireless.
    2) Bundling bandwidth with apps or services. You will pay for basic rate and other tiered pricing (much like your electricity bill)
    3) Copper is not at the end of life yet. Perhaps by end of this decade. More juice will be had – much like the 10G networking trend.

    rrk

  5. Its almost scary what is happening in Canada with usage based billing.

    Currently with Rogers, you get about 60 GB monthly milage at $45 + Tax. Anything above that is sold at $2/GB. Bell is equally worse.

    Using the internet shouldn’t be so stressful but unfortunately it is…in Canada.

  6. I really hope more local independent Internet provider getting of the ground. Especially if there is just 2choices a slow “naked” DSL not too expensive from a (mammoth) telco ; or the expensive Comcast (they are God now). I guess the last have some board-member in the FCC; in the next 12month they will start screwing the US Costumer big time; maybe Canada like. US will fall more behind of China/south Korea; thanks to the monopolization in full swing.

  7. So…

    Prices are dropping like a rock. Availability is nearly universal (94% according to the FCC with 71% able to choose from multiple suppliers). Average speeds are pretty decent (5Mbps—average, not peak—according to Akamai’s most recent State of the Internet report; behind small, dense countries like South Korea and Japan but ahead of Germany, the UK, and France, and way ahead of China).

    Sounds like an industry desperately in need of heavy handed regulation.

  8. And in this part of the world [India], my monthly DSL payments has remained constant $27 / Month but the speed has increased from 256 Kbps to 1 Mpbs in the last 4 years – Courtesy Airtel.

  9. Interesting perspective – and certainly an interesting ISP (WebPass). You are one lucky guy to have a progressive ISP nearby.
    Although price-per-byte might have gone down, most of us have seen increased “access” fees over the last years. I’m happy with my 22 Mbps from Comcast, but would probably be even happier with half-the-speed at half-the-cost. A little but that it’s always fun to have AWD and 400hp, but I can do just as fine with 200hp and front-wheel-drive.
    Sometimes the ISPs force us to buy more than we need/want, and there are no “lesser” alternatives, unless you go down to something close to unusable (like 768 kbps).

  10. Broadband Speeds Are Faster (And Only Slight More Expensive): Broadband News and Analysis « Wednesday, February 16, 2011

    [...] Today’s speeds are 34 percent faster than 2009′s average speeds of 7.12 Mbps while the cost of broadband has only risen 4 percent from 2009 to 2010, according to the analysts at In-Stat. The firm’s data doesn’t go back [...]

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