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What Is the Price of Broadband?


David ByrdBy David Byrd

A discussion about the state of broadband must always include access, speed and price (ASP) in order to provide a true assessment. The White House report Four Years of Broadband Growth” covers all three elements, but price is given the least amount of attention. In fact, it is given less than a page. This is due to two reasons. First, the price of broadband in the U.S. has not dropped as access has improved and speeds have increased. In fact, it has remained stable or even gone up in some cases. Second, a discussion of price needs to be objective and compared to a leader or, at a minimum, to a norm.

Over the last few years I have invested considerable time in developing an understanding of broadband pricing as it pertains to income and global competition.

The U.S. faces a technological challenge in remaining the worlds most dynamic and resilient economy if the state of our broadband ecosystem falls behind other industrial nations. In 2010, I did a quick comparison of the U.S. to China, India, Japan, the U.K. and Sweden. We had the highest average monthly price of the six countries:

U.S.       $53.06
Japan     $34.21
Sweden  $34.00
U.K.       $33.34
India      $22.00
China     $13.25

Based on data from the Organization for Economic Co-operation and Development (OECD) and the FCC, the U.S. continues to have the highest average monthly broadband bill of the group. Normalizing the information to reflect per megabit pricing makes no difference. Japan offers the lowest per megabit pricing at $.06, the U.K. is in the middle at $.61 and the U.S., with $1.10, is at the higher end.  

As the White House report presents U.S. pricing in 2011, “… the average monthly price for a 1-5 MBps connection was $35, the average cost of a 5-15 MBps connection was $44, and the average price of a 15-25 MBps connection was $56.50.” However, most service providers are requiring a higher total monthly bill by marketing triple play products. A triple play product includes broadband, TV and phone service with a basic package starting at $66 per month and a premium package starting at $130 per month. However, the variability of connection speeds and data plans (unlimited, capped, metered) reduces the relevance of these numbers as well.

In general, the state of broadband in the U.S. with regard to pricing continues to need improvement. Expanding the availability or access to broadband is no longer the priority. Now speed and price merit continued attention and effort on the part of private industry and government incentives if the U.S. is to provide the best competitive environment for business and lifestyle for its citizens.

David Byrd is chief marketing officer and executive vice president of channel sales for

ANPI ZONE

. He previously spent five years as vice president of marketing and sales for Broadvox and before that was vice president of channels and alliances for Eftia and Telcordia.


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