Broadband, Now Cheaper Than Ever

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 (s 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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