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The Internet The Almighty Buck Technology

Why Broadband Prices Haven't Decreased 336

Posted by CmdrTaco
from the someone-owns-boardwalk-and-parkplace dept.
pdragon04 writes "After a new technology is introduced to the market, there is usually a predictable decrease in price as it becomes more common. Laptops experienced precipitous price drops during the past decade. Digital cameras, personal computers, and computer chips all followed similar steep declines in price. Has the price of broadband Internet followed the same model? Shane Greenstein decided to look into it. "
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Why Broadband Prices Haven't Decreased

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  • by socsoc (1116769)
    Of course not, just look at your bill.
    • Re:Nope (Score:5, Informative)

      by TheKidWho (705796) on Tuesday September 14, 2010 @11:55AM (#33575154)

      Price per Mbps has most definetly dropped down. I'm paying $2/Mbps now... I used to pay $40/Mbps 6 years ago.

      • Re: (Score:3, Interesting)

        by socsoc (1116769)
        That's not the answer to the question. The price of your broadband hasn't decreased, rather the speed has increased. I recently experienced the opposite, having to switch to cable from fiber, I now pay quite a bit more for a less advertised speed (actual speed is ridiculously low).
        • Re:Nope (Score:4, Insightful)

          by devjoe (88696) on Tuesday September 14, 2010 @12:20PM (#33575532)
          Nine years ago I paid $50/month for 640kbps. For the last few years it has been $30/month for 3Mbps and I could have gotten 720kbps for $20/month. That qualifies as a drop no matter how you look at it.
          • Re: (Score:3, Interesting)

            by Magic5Ball (188725)

            It's tempting to point out that that's a factor of three drop in price per performance unit over 10 years, while CPUs, consumer gadgets, and other high technology goods have fallen in price by factors of 10 or more. However, there's no reason to compare the perishable commodity of bandwidth provided through government subsidy, to the durable goods of CPUs, cameras, etc. provided without artificial production stimulus.

            The cost of copper landlines in North America have not changed by more than a factor of 2 o

            • Re: (Score:3, Insightful)

              what basis do you have to judge broadband on the same standard as CPU speed? It's well known as a radical outlier to the point that it's the subject of jokes.
            • Re:Nope (Score:4, Insightful)

              by uniquename72 (1169497) on Tuesday September 14, 2010 @04:29PM (#33579864)
              I see broadband more as a utility than as a consumer good. The price of my electricity has gone up. THe price of my water has gone up. It's not surprising to me that the price of my broadband has also risen.

              OTOH, I'm still getting the same old water and electricity I was 5 years ago, while my broadband speed has increased somewhat. So in that way, it's a better deal.
              • Re: (Score:3, Insightful)

                by cjb658 (1235986)

                The cost of providing broadband has decreased dramatically, though. For the most part, your ISP can just plug everything in, sit back, and let it work. The exception of course is when you have some kind of issue connecting, or when enough subscribers saturate the lines, routers, and switches that more have to be installed.

                As many have said, I think the issue is that there isn't much competition.

          • Re: (Score:3, Interesting)

            >>>Nine years ago I paid $50/month for 640kbps.

            I pay $15 for similar speed (750). And you're right - that qualifies as a drop. I don't see how anyone could disagree. I think this article is yet another example of "lying with statistics" to make a point. I said as much in the comments (that DSL dropped from ~$100 to $15 during this decade), but I bet it will never appear.

            BTW is anyone else surprised by Dialup's revenue? According to the article they earned $5499 million in 1999, and $109

            • Re:Nope (Score:4, Interesting)

              by afidel (530433) on Tuesday September 14, 2010 @05:39PM (#33580766)
              Heck even if the $/month remained constant that would be a significant drop in price as inflation over a decade would reduce the real cost significantly (according to an inflation calculator I found $50 in 2009 was equivalent to $38 in 1999).
          • Re: (Score:3, Insightful)

            by poetmatt (793785)

            how is this hard for you to understand?

            It's not that things got better, it's that price hasn't dropped, and price should drop (as that's what market influence does). Just because you can get a 50 pack of DVD-r's for $20 versus a 10 pack years ago for the same price doesn't mean that it's as substantial a drop as it sounds like, even with inflation considered, especially since the discs cost pennies to make.

            The same is true of cellphone service, which actually hasn't dropped anywhere near it's cost either.

        • by TheKidWho (705796)

          I pay $100/month for 50Mbps Cable service. I get the full 50Mbps 24/7 as far as I can tell(Within my usages). YMMV.

          I actually pay almost twice as much now as I used to, but I get almost 10 times the speed.

          • Re: (Score:3, Interesting)

            by Amouth (879122)

            where the hell do you people live?

            i pay 50$ a month for 5Mbps/512k

            i'm not a stickler looking for more bandwith - it'd rather have lower cost - hell 20$ for 1Mbps would be fine.. i never need more than that really, its the low latency i need.

            • Re: (Score:3, Informative)

              by edwdig (47888)

              Don't know about the previous poster, but in a lot of the New York area you can get Cablevision. They offer 15/5 service for about $45/month. An extra $15/month doubles the rate. There's also 100Mbps down for something around $90-$100 a month. Those numbers all go down a little if you have the triple play package. The lowest end package is fine for me, so I never looked too hard into the specifics on the higher options.

        • Re:Nope (Score:4, Informative)

          by Bengie (1121981) on Tuesday September 14, 2010 @01:15PM (#33576560)

          My parents use to pay $40 for 386kbit back in '98

          I now pay $50 for 16mbit.

          account for 4% inflation over 12 years and that $40 was worth ~$60 in todays money.

          yep, has gone down

        • Re: (Score:3, Insightful)

          >>>The price of your broadband hasn't decreased, rather the speed has increased

          Same with laptops and other gadgets.
          2000 - spent $350 for Win98 laptop. Today - spent $350 for Win7 laptop.
          2000 - spent $200 for TV. Today - spent $200 for TV.
          2000 - spent $300 for VCR. Today - spent $300 for DVR.

          Prices have not dropped for other electronic devices, so why do we expect prices to drop for high-speed internet? It is illogical. Actually now that I think about it: ONE thing has dropped. I used to spend

      • by hedwards (940851)
        Out here in Seattle, we still pay $40+ a month for 5Mbps. And I'm not even convinced that we're getting the full 5mbps that we were promised. It really depends where you are, and I'm guessing that on the balance you're in the minority.
      • Re: (Score:3, Informative)

        by Gaygirlie (1657131)

        Here in Finland we are in a lucky position compared to US citizens and I chuckle to myself every time I see how hideously high prices people there pay. My mobile phone has a 384kbit/s upload-download data plan, with absolutely no limits, for 5 euros a month, and at home we have ADSL 12Mbit/s down and 3Mbit/s up, unlimited, for about 40 euros a month. That's about $6.50 and $52 respectively. Oh, and the phone is not locked to any specific carrier or anything, I just bought it from the store unlocked.

        The titl

    • by geekoid (135745)

      I get 10 Mbs for 30 dollars.
      In 1998 I got 768Kb for...40 bucks.

      So my price per bit has dropped dramatically

      • Re: (Score:3, Informative)

        by characterZer0 (138196)

        Lucky.

        I get 3Mbps for $55.
        6 months ago I got 3Mbps for $50
        12 months ago I got 3Mbps for $45
        5 years ago I got 3Mbps for $40.
        7 years ago I got 3Mbps for $35.

        What the fuck Time Warner?

        • In what city are you paying $55 for only 3mbps? In pretty much any city around where I live the 7mbps package is only around 40 bucks. Hell $55 is more than I pay for the 15/2 package.

          • Re:Yep (Score:5, Interesting)

            by characterZer0 (138196) on Tuesday September 14, 2010 @12:49PM (#33576120)

            Rochester, NY

            My options are:

            1Mbps/256Kbps for $40 from Clearwire.
            3Mbps/512Kbps for $55 from Time Warner.

            The telephone company offers DSL at similar speeds and price to Time Warner, but I have had only unpleasant dealings with them in the past, and have heard* that they used to "accidentally" disconnect the CLECs until they all stopped offering competing services.

            * off-the-record comments from people who dealt closely with CLECs. I do not know if it is true or not.

            Why can't I get anything better than 768K up? A few times I have asked and they responded with an angry "Why? Are you doing a lot of file sharing?". I tried to explain that I back up my data to a VPS and I work from home and push a lot of data through a VPN, but I got the impression that they think anybody who wants a good upload speed is a pirate.

            • Re: (Score:3, Interesting)

              by atisss (1661313)

              Huh, beat me

              30$ for 100Mbps full duplex country wide, capped to 10Mbps for overseas.

              Riga, Latvia, Eastern Europe :)

              • Re:Yep (Score:4, Informative)

                by Algan (20532) on Tuesday September 14, 2010 @05:25PM (#33580564)

                $12/mo for 100Mbps full duplex fiber, uncapped worldwide
                Bucharest, Romania, Eastern Europe

                Actually it's my dad's connection, and he has the 50mbps package for $9/mo. 100mbps is available, but he says 50 it's more than enough for his needs.
                Meanwhile, I pay $60/mo for 30/5 mbps here in the good ole US of A, the birthplace of the Internet.

            • Re: (Score:3, Informative)

              by Anonymous Coward

              I don't know where you're getting these numbers, but as someone who works for TWC and services Rochester, that's dead wrong.

              RR Lite 768Kbps is 22.95, 24.95 if it's your only service.
              RR Basic 1.5Mbps is 29.95, 32.99 if it's your only service.
              RR Standard 10x1 is 42.95, 49.99 if it's your only service, 44.95 if you only also have basic cable (broadcast basic, which is about 12 channels, not standard cable with about 80)

              RR Turbo 15x1 is 9.95 on top of the price of standard.
              RR Extreme is 30x5 and is $20 on top o

        • Re:Yep (Score:4, Insightful)

          by lgw (121541) on Tuesday September 14, 2010 @12:29PM (#33575702) Journal

          yeah, my AT&T DSL pricing shows about the same curve, if not from so far back. Bandwidth has stagnated and prices just go up. There's certainly competition between DSL and cable in my area, but I suspect you need small, hungry companies (or at least the threat of them) for competition to help here.

  • by Dyinobal (1427207) on Tuesday September 14, 2010 @11:47AM (#33574998)
    Because companies aren't interested in seeing their profit margins decrease.
    • by arivanov (12034) on Tuesday September 14, 2010 @11:58AM (#33575214) Homepage

      Not quite so.

      The speed of evolution in Broadband technology prevents the bill from dropping. By the time the equipment is fully depreciated and your bill _CAN_ drop it has to be replaced with a next gen equipment. No broadband tech has lived for more than 3 years so far.

      DSL with ATM backhaul, DSL with Ethernet Backhaul, DSL2+, VDSL/FTTC and before the latter is anywhere near depreciated we are marching into PON/GPON land. Same for Cable - Docsis 1.0, 1.2, 2.0, 3.0 over 12 years.

      It may start dropping once we are in the land of PON. That is the first technology so far which does not look like an ephemeral stopgap.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        The speed of evolution in Broadband technology prevents the bill from dropping.

        Yet somehow the faster speed of CPU evolution (Moore's "law") and hard drive evolution has allowed those things to become both cheaper and much more powerful. And don't tell me that investing in a new fab or retooling an existing fab is cheap, 'cuz it ain't.

        My bet is that the telcos overwhelmingly tend to be monopolies. Because of that, they upgrade their equipment only reluctantly when they have too thoroughly oversold the

        • Moore's Law is not processor speed, it is how many transistors you can fit on an IC. Moore's Law did follow processing speed until we hit a barrier and now have to use multiple cores.

          Yup, manufacturing of ICs does not become cheaper over time. That follows Moore's Second Law, cost doubles every 18 months.

          For networking we have Butter's Law. Cost of sending bits over a network halves every 9 months, and also speed of sending bits of data doubles every 9 months.

          ISPs do not give such increases in speed to thei

      • by Anonymous Coward on Tuesday September 14, 2010 @12:16PM (#33575488)
        I thought I was subsidizing that with my $70 dial-up landline with all the options - for twenty fucking years.
        • Re: (Score:3, Insightful)

          by Anonymous Coward

          Yeah you also subsidized it with $35 billion from the govt to lay down the fiber. That was back in 1996 and now there are new bills being voted on to give them some more. Yet some Eastern European countries are offering TV, Pone and Internet(5Mbps) for $18 dollars! Sure that is government subsidized but so it our service as well. Imagine how great (and cheap) our internet access would be if the companies had to really compete for their customers and not lock them it. The price would be fixed for a baseli

      • Re: (Score:3, Insightful)

        by hedwards (940851)
        But, they aren't upgrading their equipment. I mean the available speeds here haven't changed in years. Back in 2000, the cable modem was giving me 4mbps, and now my DSL is promising 5Mbps. Which is the top speed available from Qwest. Supposedly, Speakeasy can do 10mbps, for way over a hundred a month.

        I'd be ecstatic if the price weren't going down because the speeds were going up so drastically, but around here, despite all the IT companies, the speeds have been stagnant for years.

        Supposedly, a part o
    • by tagno25 (1518033)

      Because companies aren't interested in seeing their profit margins decrease.

      No companies are not interested in seeing their profit margins stay the same.

      Wholesale bandwidth had been steadily dropping. A couple years ago we used to pay $200 per Mbit now we are paying $2 per Mbit. We could get it as low as $1.45, or less, if we bought a Gbit circuit and had IPv6.

      • Re: (Score:3, Informative)

        by TheRaven64 (641858)

        Bandwidth to where? The cost of a consumer Internet connection is the cost of maintaining the last-mile infrastructure plus the cost of routing the packets after that hop. With peering agreements, the cost of routing the packets is generally close to nothing. The cost of maintaining the last mile infrastructure (including repaying the initial capital investment in building it) is much higher. This cost has not really changed much in the last ten years - if anything, deploying new fibre networks rather t

    • by catbutt (469582)
      So why have prices of laptops and cameras dropped? Are their manufacturers just stupid?

      No, everyone presumably tries to charge the price that makes them the most money -- and outside forces determine that price. Supply and demand and such.

      Simplistic, cynical answers are easy, but rarely accurate.
      • by iksbob (947407) on Tuesday September 14, 2010 @12:22PM (#33575586)

        How is the cynical answer not accurate here?
        The article states that in most locations, broadband access is controlled by a duopoly of businesses that are unwilling to initiate a price war. This state of non-competition means prices are NOT being controlled by outside forces. The only thing that makes this duopoly better than a monopoly is that each non-competitor doesn't have the balls to actively exploit their position by raising prices.

        • Re: (Score:3, Informative)

          by Bagels (676159)
          Considering prices for FiOS went up this year to $55/month for me, Verizon definitely does have the requisite testicular fortitude.
      • So why have prices of laptops and cameras dropped? Are their manufacturers just stupid?

        In many cases, yes. Many of the OEMs have basically reduced the laptop/desktop market into having razor-thin margins in trying to compete for marketshare.

  • darn (Score:4, Funny)

    by NEDHead (1651195) on Tuesday September 14, 2010 @11:49AM (#33575028)
    I have a pertinent comment - but I can't afford the bandwidth surcharge
  • Oligopoly (Score:5, Interesting)

    by ShakaUVM (157947) on Tuesday September 14, 2010 @11:51AM (#33575064) Homepage Journal

    In 1997 we got a 30/3 cable modem service, shared with the neighborhood. Since we were the only people on it, we had a 30/3 connection for $60/month. Now I get a dedicated 24/2 connection from U-verse for the same price. I guess it's better now?

    Oligopolys don't have the same sort of competition that drives down prices. Even if they don't fix prices, they don't have an incentive to get into a bidding war. For this reason, the price of cell phones is high, and has remained high. Maybe the Walmart thing, and further work by Cricket or Metro PCS will eventually push prices down.

    • Re:Oligopoly (Score:4, Insightful)

      by TubeSteak (669689) on Tuesday September 14, 2010 @11:59AM (#33575232) Journal

      Oligopolys don't have the same sort of competition that drives down prices. Even if they don't fix prices, they don't have an incentive to get into a bidding war. For this reason, the price of cell phones is high, and has remained high. Maybe the Walmart thing, and further work by Cricket or Metro PCS will eventually push prices down.

      Walmart is powered by T-Mobile.
      Cricket and Metro piggyback on existing national networks.

      There are only a handful of national cell phone providers: Sprint Nextel, Verizon, T-Mobile, and AT&T.
      Four sellers doesn't have to be an oligopoly, but that's how they've chosen to behave.

      • Re: (Score:3, Interesting)

        by RobinEggs (1453925)

        Four sellers doesn't have to be an oligopoly, but that's how they've chosen to behave.

        Actually, they do have to be an oligopoly. I can't remember the reference, but the book "Raising Less Corn, More Hell" included citations of an economist whose data suggested that when 4 or less competitors control 65% or more of a market they will automatically collude to control prices. Note that I say automatically and not [necessarily] intentionally; the source contended that market forces will affect each company such that, if profits are their main priority, then even without collusion they will effe

    • by greymond (539980)

      Who is Cricket and Metro PCS? I only know who AT&T and Verizon are... ;)

    • Re:Oligopoly (Score:4, Insightful)

      by mikeiver1 (1630021) on Tuesday September 14, 2010 @12:35PM (#33575818)
      I read this kind of article and think, The last mile services should be owned by the municipality. All coming to a central data center where ALL the players have to sit in the same CoLo and compete for customers. This of course relies on the municipality being able to maintain a basic level of service on their lines. This would require fibre to make it reliable and cost effective in the long run. It would also make it rather competitive as the providers would not have a captive customer. You could have dozens of providers and literally switch to another provider with a change in the routing table of the switch. The FCC is not here for the consumer, they are owned by the large communications corps and only work in their interest to help maintain obscene profits and control of the customers under them. Seeing the issues and fixing them are on vastly different plains though..... We are destined to be bent over for a long time to come. Chattanooga, TN. is starting to look very good.
  • Er, they have? (Score:3, Insightful)

    by SpooForBrains (771537) on Tuesday September 14, 2010 @11:51AM (#33575076)

    In the UK at least. Free broadband deals are common loss-leaders from companies like Sky and Orange.

    The pay services have scaled as well, so £35 per month buys you much more bandwidth than it did five years ago.

    • Re:Er, they have? (Score:5, Insightful)

      by nurb432 (527695) on Tuesday September 14, 2010 @11:55AM (#33575156) Homepage Journal

      You must have competition there. We dont.

      • Re: (Score:3, Insightful)

        by EdZ (755139)
        We have enforce competition in the form of LLU Unbundling. BT, the owners of most of the POTS infrastructure in the country, are required to allow other providers to install their equipment in order to provide a broadband service, rather than just re-selling BT's wholesale service.
      • by Pollux (102520)

        The UK has 660 people [wikipedia.org] per square mile. We don't.

        That's a lot of customers in a very small space. Lots of potential business in a small area means cheaper costs of deployment and greater returns on the investment, leading to easy competition.

        • Re:Er, they have? (Score:5, Informative)

          by jcupitt65 (68879) on Tuesday September 14, 2010 @12:41PM (#33575972)

          Finland has half the population density of the US and far faster, cheaper broadband. NYC has huge population density, but very slow, very expensive broadband.

          The key factor is competition: US infrastructure owners are allowed to block competitors from using their bits of wire. This creates an almost insurmountable barrier to entry on the market and effectively establishes local monopolies. Consumers have little or no choice, usually.

          Everywhere else in the world has a regulatory framework that enforces open access: owners of infrastructure have to sell access to their cabling to all comers at non-discriminatory rates. As a result setting up an ISP is cheap and easy, there is enormous competition, and consumers get fast broadband for chickenfeed.

          Here's a lecture by Lessig on the subject:

          http://lessig.blip.tv/file/3485790 [lessig.blip.tv]

        • Re:Er, they have? (Score:4, Informative)

          by Anonymous Coward on Tuesday September 14, 2010 @01:09PM (#33576462)

          I live in Finland. We have 41.124 persons per square mile. You have 81.769 persons per square mile. Yet for some reasons broadband prices here are dirt cheap compared to yours. How is that possible?

          Just think about it. You have extremely expensive broadband even in places such as New York which is bustling with people. We can get faster and cheaper connections in middle of nowhere (outside the few major cities).

          • Re: (Score:3, Insightful)

            by Tacvek (948259)

            Population density is a poor measure. What really matters is what percentage of the total population lives in areas with different local population densities.

            If Finland were set up where 99.9% of people lived in a handful of cities (with those cities as far apart as possible) with population densities along the line of 70,951/sq mi (27,394.3/km^2) (the density of Manhattan) it would be a very different place than it is now. Similarly, if everybody in Finland were equally spread out, the country would be a

  • One word (Score:5, Insightful)

    by flaming error (1041742) on Tuesday September 14, 2010 @11:53AM (#33575096) Journal

    Competition.

    Where I live I can have dial-up, or cable.

    • by Sporkinum (655143)

      No competition where I am. I paid $45 for 1 meg DSL 10 years ago. I pay the same now. It's slightly faster now though, more like 1.2 meg.

  • Northwestern.edu hasn't been paying their internet bills...
  • by $RANDOMLUSER (804576) on Tuesday September 14, 2010 @11:54AM (#33575110)
    Broadband is more a like service than a commodity. The infrastructure support costs (particularly labor) simply don't respond to economies of scale the way repetitively manufactured items do.
  • by AmazinglySmooth (1668735) on Tuesday September 14, 2010 @11:54AM (#33575132)
    I'm old enough to remember when broadband to the home was new. DSL was $50/month. At my apartment, they wanted $80/month for 1.5Mbps. I now can get 8Mbps for $40/month. DSL was down to $15/month. So, prices did drop. Now they are bundling and offering "faster" service to keep prices up. I think this is totally inline with declines in tech prices. Every year new PC's are brought out at the same price points but with more or faster or better. PC price drops have stopped too. I don't see any conspiracy or screwing.
    • I had Comcast@Home installed in 1997. Basically an uncapped 8/1 connection for $40/mo with equipment rental. By 2001 @Home collapsed and the system was over subscribed. A cap of 1.5m/384k was put into place once Comcast brought everything in house. There were some incremental speed increases, but nothing spectacular and the price only seemed to steadily increase. When I left for FiOS in 2007 I think Comcast was still capped at 3-4M/512k up on the regular tier. Cable really didn't become competitive until...

  • Transportation is transferring something that increases as O(size^N) via channels that increase as O(size^(M)) at best, where "size" is information or volume of goods. M N. Transportation costs/volume can only increase with time.

  • the study is bogus (Score:5, Insightful)

    by alen (225700) on Tuesday September 14, 2010 @11:57AM (#33575184)

    i remember the days when 33kpbs dial up was $30 or $40 a month. today i'm paying $120 a month for cable TV, digital unlimited phone over my cable, a DVR and the lowest level of broadband from time warner which averages out to 5mbps on average. sometimes hits 10 depending on time of day. DSL which was close to $50 when it first came out can be had for $15 a month these days.

    otherwise there is a big difference in the business models. to build a laptop you need very little resources for the engineering and most of the cost is buying the parts and software. even in the 1990's companies like alienware and falcon northwest started very small because other than the engineering/QA costs your biggest cost is buying the parts which are repaid when you sell the computer.

    the ISP/telecom business is different. you need a huge capital investment to lay the wires and upgrade your network. this is usually financed by long term bonds where you pay 8% or so interest on average. in the case of Verizon that spent $10 billion or so to deploy FIOS the interest cost is approximately $800,000,000 PER YEAR. if i'm wrong about the figures then find them yourself and calculate the interest. then you have to buy the equipment whether it's cable modems or FIOS modems or whatever which is very expensive when you are first deploying new tech. i've read estimates that Verizon spent $400 per customer for the equipment. and don't forget about each hick town forcing you to finance a yarn museum or some other nonsense because you are huge company that is going to make a killing on the poor residents and you should pay up

    it's almost like the console business where the initial customers are money losers and you make your profits later on

    • by alen (225700)

      PS and you pay the interest whether you are providing a service or not. you get the cash and then it will probably take a year or so to initially deploy your new wires and start service and the bond holders still expect their interest payments that year. and if your break even point is say 3 years you still pay interest.

    • Re: (Score:2, Funny)

      by MattGWU (86623)

      Interesting post, but the real take home here is "yarn museum", which I will be using as an example of pretty much everything from now on. Thanks!

      • by alen (225700)

        i think the name of the movie was Michael with John Travolta. he was the arch-angel Michael who wanted to travel the US and see the sights no one else does. one was a big ball of yarn some where

      • Re: (Score:3, Interesting)

        by alen (225700)

        applies to NYC as well. someone wants to build a new sky scraper and they agreed to spend $100 million on improving local public transportation and subway stations. happens all the time here. most of the NYC subway escalators are paid for by private industry as a condition of getting permits to build something

    • I've heard this argument many times, but in my heart I don't believe it - I must be missing something.
      Granted this is oversimplifying the problem but:
      An adsl modem costs me approx £100. Assuming that they telco buys in bulk and has multi line boxes (which will reduce the cost per line) but that they will buy at the leading edge of design then I'll assume their modem costs about the same as mine. In the UK at least the phone lines that constitude the bulk of investment were paid off years ago as part o

    • by pspahn (1175617)

      today i'm paying $120 a month for cable TV, digital unlimited phone over my cable, a DVR and the lowest level of broadband from time warner which averages out to 5mbps on average.

      Think about this statement.

      Ten years ago, what did you expect to do with your internet connection? Web, email, maybe some downloads, possibly voice. Now look at what you can do with it today. It is an all encompassing entertainment and communication medium. Regardless of what the price as done in the last decade, you are getting WAY MORE VALUE out of that connection than before. Personally, I'm willing to pay $80/mo for my cell phone service simply because I can carry internet around with me. This is total

    • When I first moved into my house in 1999, there was no broadband -- it was dialup or a T1.

      A year later, DSL, $80/month, 768k bidirectional, 1 static IP.

      Switched ISPs, the price stayed the same, but the speed went up to 1.5/1; in essence, a price decrease per kb of bandwidth. Thanks to a kludge in routing, I managed to "steal" 2 more static IPs (broadcast and network) by changing my netmask on my router one bit wider.

      This spring I switched to Comcast Business Class -- 5 real static IPs, $69/month, 12 down/2

  • by coolsnowmen (695297) on Tuesday September 14, 2010 @11:59AM (#33575218)

    Laptops experienced precipitous price drops during the past decade. Digital cameras, personal computers, and computer chips all followed similar steep declines in price.

    These things aren't really comparable. These are all gadgets, the internet is a service.

    The range of quality and prices has increased in the gadget market because the cost benefit ratio of getting into that market is extremely different, AND because if you don't like the the most recent laptop you have choices you don't have with ISPs. You have a half dozen other laptops that you can choose instead, in addition to the added choice of, keeping your old one a little longer. That is, you can still have your old camera a little longer and wait for a digital camera you want to come down in price because that decision changed the supply and demand (reduced demand). Choosing NOT to have internet isn't really a choice most people are prepared to make. I guess I could live at my local library, but they don't let me bring my XBOX.

  • Missing something (Score:5, Insightful)

    by Aceticon (140883) on Tuesday September 14, 2010 @12:00PM (#33575252)

    The title should say "Why Broadband Prices Haven't Decreased in the US"

    For which the answer is:
    - Most of the US has a de facto oligopoly in the provision of broadband services so the suppiers feel no market pressure to improve services and/or lower prices

    The reasons for the oligopoly are:
    - High barriers to entry due the cost of laying new cables/fibre, especially for the last mile. The difficulty in getting rights of way raises these even further.
    - Entrenched suppliers with fully paid-up infrastrutures. To add insult to injury, most of that infrastruture has been paid for with taxpayer's money.
    - Bought up and paid for politician which not only do not take any measures to open the market up for competition (like those that were taken in Europe) but activelly stop new competition from coming to the market (by blocking municipal projects, not assigning rights-of-way for laying new cables/fiber and in general maintain a climate of regulatory uncertainty).

    The rest of the world has been hapilly getting better speeds for less money thank you very much.

    • by darjen (879890)

      The high barrier of entry can be overcome by competition, and has in the past. For example, there were private railroad men who competed successfully with federally subsidized lines. But it seems more difficult to overcome government deals to restrict competition. At least not without a massive populist effort. That's the primary reason there is an entrenched oligarchy. Our greasy politicians have given it to them.

    • Absolutely right (Score:5, Insightful)

      by Infonaut (96956) <infonaut@gmail.com> on Tuesday September 14, 2010 @12:33PM (#33575778) Homepage Journal

      Think the telecom industry is a bastion of good ol' American competition? Think again. These guys have been running circles around the FCC for years. They've taken massive tax breaks and incentives to build out broadband, and by any reasonable standard they have failed to make good on that promise. In the early 2000s, they succeeded in getting the Supreme Court to buy into the idea that they could box out newcomers like Covad, while anticompetitive tactics ran rampant. At the very same time, they were dragging their heels rolling out DSL. The irony is that the Baby Bells only exist in the first place because the government created them by breaking up the original AT&T.

      Taxpayers have been getting reamed by US telecom companies for decades, the FCC is far too close to the industry it regulates, and the courts have done a very poor job of safeguarding a level playing field. The entire industry needs an enema.

    • Re:Missing something (Score:4, Interesting)

      by TheSync (5291) on Tuesday September 14, 2010 @01:30PM (#33576896) Journal

      Most of the US has a de facto oligopoly in the provision of broadband services so the suppiers feel no market pressure to improve services and/or lower prices

      Most of the US has a de jure monopoly in cable and telecom due to exclusive franchises granted by local public utility commissions, although this is changing slowly (for example in Opelika [oanow.com]).

      Contact or better yet get on the board of your local cable commission...

  • The last few years I've been calling about once a year just to see if they've installed a closer office and every time I've gotten a reduced price instead.
  • Seriously. How can the US lag behind Europe, Japan, Korea, etc.
  • by Eggplant62 (120514) on Tuesday September 14, 2010 @12:11PM (#33575406)

    Broadband prices won't decrease because it would cut down on the profitability of the carriers. I just called my cable provider today and told them to stick the TV service, but we're keeping the Internet feed until they price that out of an affordable budget. I can get everything I ever did via the 'net now, so no worries.

  • by Kumiorava (95318) on Tuesday September 14, 2010 @12:12PM (#33575428)

    Even the article states that "They found that, even though prices stayed relatively constant, the quality of service rose through the years—for example, in 2004 the median cable modem contract price was about $45 with an upload bandwidth of 3000 bits per second, while in 2009 the median contract cost $53 but had an upload bandwidth of 8000 bps." Doubled the bandwidth per dollar over 5 years. I wouldn't call that insignificant.

    Second reason is that there are price points that people are willing to pay. If ordinary household would prefer to have $10 per month broadband or none at all then there would be $10 broadband providers out there and average price would skew towards that. The bandwidth and service wouldn't be as high as it is now or the broadband would be more limited in other ways. The price points are formed over time and they can be wildly different from country to country based on available income and culture.

  • by Monsieur Canard (766354) on Tuesday September 14, 2010 @12:15PM (#33575466)

    I'm sure prices will drop soon.

    It's like after music CDs were introduced that cost a whole 12-13 dollars each. But that was only because manufacturing plants were scarce and demand was low. Once production ramped up and demand increased then prices naturally went ....

    Oh bother.

  • All the examples cited in the summary are products. Broadband internet is a service. The hardware required for broadband internet access has certainly gotten cheaper. But why does he think the service would get cheaper? I can't think of other examples of services that get cheaper over time unless there is punctuated technological advancement. Broadband gets more or less continuously faster, but no punctuation. Other services like power, water, telephone service, cable television, these have all gotten
  • A full box of punched cards was high bandwidth, back in the day. It certainly beat a 300 baud terminal that was largely ignored by the mainframe.
  • When I first got BB I was paying £45 / month for an unlimited 256kbit/s connection. Now I pay £7.50 a month and get 14,400 KBit/s.

    So I'm paying one sixth the price and getting over 50 times the speed. That sounds like a pretty good deal to me and makes me think that whoever is bleating on that their broadband price hasn't decreased either has no idea what they're talking about, or should really look around for a better deal, or is living in a country with next to no competition.

    But for the v

  • Apples to Oranges (Score:3, Insightful)

    by Dancindan84 (1056246) on Tuesday September 14, 2010 @01:16PM (#33576586)
    This just in: Providing a service doesn't follow the same price changes over time as providing a product. There's much more support and infrastructure maintenance/upgrading involved.
  • Prices (Score:3, Interesting)

    by yoshi_mon (172895) on Tuesday September 14, 2010 @01:21PM (#33576688)

    I'm fine with my, currently cable, broadband bill. As long as it does not go up and they continue to increase the speed I see it as win win. I'm paying for them for a) their own profit, b) the actual service and all that goes with that, and c) them upgrading their infrastructure as tech advances.

    As long as all of those 3 things are happening then I have no issue. I think where some people take issue, and rightly in some cases, is that either not all 3 of those things are happening or that point C is not happening fast enough.

  • by LBArrettAnderson (655246) on Tuesday September 14, 2010 @02:16PM (#33577814)

    Broadband prices *HAVE* decreased. A lot. You're just using more of it now. Now the average person uses 50 "broadbands," and pay what they paid for 1 "broadband" 10 years ago.

  • by rgviza (1303161) on Tuesday September 14, 2010 @02:39PM (#33578240)

    I used to pay $5 (off peak) to $22.50(peak) an hour to use compuserve at 300baud (that's a little less than 1/3 of 1kbps for those that don't know what 300 baud means)

    I think the prices have come down a bit. (no pun intended)

    Granted that wasn't internet service, but the end result (communication and finding information using a computer) was comparable.

    My mom was PISSED when she got that first bill. I was 13 and didn't realize what I was doing.

  • Competition (Score:3, Informative)

    by Jason Levine (196982) on Tuesday September 14, 2010 @04:42PM (#33580024)

    If I want to buy a digital camera, I can get a Canon, Olympus, Fujifilm, Kodak or a dozen other brand names. These various companies are all vying for my digital camera dollar and so will try to give me the best feature-set for my money.

    If I want to buy a computer, I could get a Dell, Hewlett-Packard, eMachines, etc. Same rule applies as above.

    If I want to get broadband Internet access, I can go with Time Warner Cable or.... or.... Well, Verizon has DSL which they aren't supporting as well anymore. No FIOS in my area. Other than that, nothing. Most areas have two or less providers. With that, companies know that a person shopping for broadband has a 50-50 chance or 100% change of choosing them (with 2 or 1 providers respectfully). This means they have to do pretty much nothing to get your dollars. They can spar gently with the opposing company (if one exists) to get their churned users, but otherwise they have no incentive to give users great speeds at low prices. Now, if there were a dozen broadband companies serving each area, you'd see low prices and better service.

  • by RomulusNR (29439) on Tuesday September 14, 2010 @05:57PM (#33580982) Homepage

    The authors of TFA say they are "surprised" that despite the payoff of infrastructure and the age of the technology that prices have not come down.

    It's as if they think rich people don't like money.

    The only reason a rich person gives up money is if he thinks he will lose more if he doesn't give up a little -- or if he thinks it will lead to getting even more money back. I.e. competition. And progressive taxes.

    There's zero reason for telecommunications companies to reduce rates. This notion that "they make enough now, therefore they should lower/stop raising rates" is so silly, it's like trying to argue that greed = benevolence.

    And yet this very principle is the underpinning of the libertarian free market religion. But like those of all other religions, it is utterly flawed, unfounded, and unrealistic.

"Pay no attention to the man behind the curtain." -- Karl, as he stepped behind the computer to reboot it, during a FAT

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