[LINK] Why Broadband Prices Haven’t Decreased
Kim Holburn
kim at holburn.net
Wed Sep 15 08:20:31 AEST 2010
Although this is a US study, some of the findings and arguments have
bearing in Australia.
Note particularly:
> Meanwhile, once companies have installed the lines, their costs are
> far below prices. "At that point, it becomes pure profit,
http://insight.kellogg.northwestern.edu/index.php/Kellogg/article/why_broadband_prices_havent_decreased
> Why Broadband Prices Haven’t Decreased
> Creating the first broadband consumer price index
> Based on the Research of Shane Greenstein And Ryan McDevitt
> 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.
....
> Pricing Policy
> It might seem like the cost of obtaining access to broadband
> Internet service would be prohibitive for many, but Greenstein notes
> that cable television wires already pass by more than 95 percent of
> US homes, while 75 percent of homes are close enough to a telephone
> switch for a DSL provision. "Any place with a population above
> 50,000 is not going to have a problem getting service," Greenstein
> says.
....
> Meanwhile, once companies have installed the lines, their costs are
> far below prices. "At that point, it becomes pure profit,"
> Greenstein says. A company might spend around $100 per year to
> "maintain and service" the connection, but people are paying nearly
> that amount every other month. Greenstein says that it is not
> surprising that prices were high during the buildout phase in the
> early and mid-2000s, since the firms were trying to recover their
> costs. "However, we are approaching the end of the first buildout,
> so competitive pressures should have led to price drops by now, if
> there are any. Like many observers, I expected to see prices drop by
> now, and I am surprised they have not."
.....
> The most surprising discovery, Greenstein says, is that national
> decisions are being made without the type of data that he created in
> the consumer price index. "As an observer of communications policy
> in the U.S., I find it shocking sometimes how often government makes
> decisions by the seat of their pants," he says. Without real data
> and statistics, decisions are based solely on who has better
> arguments—in essence, a debate. A better consumer price index will
> help produce better decisions for the future of the Internet and its
> users.
--
Kim Holburn
IT Network & Security Consultant
T: +61 2 61402408 M: +61 404072753
mailto:kim at holburn.net aim://kimholburn
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