The Fake Broadband Price War

from the it-doesn't-really-exist dept

One of the favorite lines trotted out by the telcos and their think tanks concerning the lack of competition in the telco world is that there obviously is competition, otherwise how would you explain the fact that DSL prices keep getting cheaper. The problem is that this is false. While it’s true that many DSL providers now offer introductory, time-limited, promotional pricing, the price can go up quite a bit once the promotion ends. Not only that, but since they refuse to offer you DSL without a phone line, you’re going to end up paying a lot more than the promotional rate no matter what. When someone from a think tank made the claim recently that DSL prices are now only $18/month, I asked to see the $18 bill. Not surprisingly, there was no response — because such a bill doesn’t exist. Once the forced bundles come in and the various fees, you’re talking much higher prices. Now, there’s a new study that gives actual numbers noting there is no real price war in broadband. The true price of DSL remains around $35 — just slightly lower than cable broadband. Don’t let the introductory prices, hidden fees and required bundles fool you. There isn’t enough competition in the broadband space — which is just the way the telcos and the FCC like it.


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Comments on “The Fake Broadband Price War”

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75 Comments
Eileen says:

AT&T

Don’t even get me started…

First, AT&T offers special “promotional pricing” if you order over the internet. Fine… if you can get them to let you. Every time I tried to order DSL it would tell me “you need to call in order to make sure DSL is available”. When I tried to get the internet pricing over the phone it was a no go. This has also happened to 3 other people that I have talked to.

Additionally, I was lied to (by omission) by the sales staff in regards to what was REALLY the cheapest option. I finally had to threaten to hang up before she admitted that yes, I could get bare-bones phone service for $7/mo but it “really wasn’t a good deal, I don’t think you’ll like it”, oh and surprise, the cheapest phone service requires a $39 set-up fee and it COSTS EXTRA to get no long distance. yes, you heard me. It was cheaper to get 60 minutes a month of long distance than to pay the “fee to have long distance disabled”. You’ve got to be f-ing kidding me. The also failed to mention that there is a $50 router available and ordered me the $80 for no reason since I ALREADY HAVE a wireless router. I had to do a ridiculous amount of threatening to get them to just order me the freaking lowest cost options, and I still think I got screwed. I’m paying $35/mo, just like everyone else. I am not planning on keeping them after this year.

Curtis says:

alternate solution

I refuse to pay comcast’s high costs. I call Comcast up and chew them out and get them to lower my bill (works most of the time, i’ve never paid the full price) Also I live with roomates so we alternately cancel and resign up for the latest promotion :D. Not to mention the fact that the we employ a wireless network to “share” our connection with our neighbors who also chip in for the bill.

Cheap internet is available, you just got to know how to play the game 😀

Chris says:

Re: Re: Re:

Actually – As a Bellsouth Tech we sync test the signal and on a 6MG service we are normaly pumping out 8Mgs or higher – and in the past 4 years we have lowered the price of all DSL’s as new tears come out. Know your facts or computers before you slam a service. There are other factors to speed besides what we send you.

Sean (user link) says:

Re: Re:

Lol. You’re being screwed out of like $100 there.

Anyways, if the Telco’s want to bring in new customers with their ‘promotional pricing’ bullshit, they should KEEP THOSE COSTS. If you can provide a cheap service for those who can abrely afford it then you will hold them in -_-.

And this 18$/month cost? LOL yeah.. I think they missed a period there, 1.8$ a month, FOR THEM TO PROVIDE IT FOR YOU.

That’s my two cents.

[UC]Gunjin says:

Re: 130 dollars for 6MB?

Wow. You got sold what we call “Dry Loop” DSL, which doesn’t require a phone line attached to it. Don’t kid yourself though, since you are paying for a phone even though you don’t have one.

BTW. ATT DSL is 29.99 for the 6mb connection. Not sure what it goes up to after the one year.

I have Time Warner myself. I pay 120 bucks a month for Digital Cable (no premium channels) and 5meg connection.

Anonymous Coward says:

Re: I pay $130 a month for my DSL w/o a phone line

hmm I have 6.o mb down and 1.5 up on earthlink broadband. I only pay 41.95 per month. that is with all the fees included. the only thing i can see that DSL is good for is if you need a static IP address. It usually is cheaper than broadband for the static IP.

Michael Harper says:

Re: Re: illegal alternate solution

Just for FYI: If anyone is interested in a legal way to share out their DSL connections as well as extend the range of a base station please let me know – I will help you do you it. I’m in the process of creating a community site designed to educate neighborhoods design and share their connections not to mention get the most out of technology. Our Telcos have not and will not do this – they just want the money!!!

Conatct me at harpermi@speakeasy.net

Curtis says:

Re: illegal alternate solution

Actually I wont get charged its not under my name right now. Regarless we have adopted a policy of pleeding ignorant, lol. Who reads their TOS agreement anyways? I am paying for the connection and i will use it how i want. period.

Besides the comcast guys that do the service work could really care less from what i’ve seen. I had a neighbor take the blockers off his cable lines 3 times so he could get all the premium channels, everytime a service guy would come out he would pleed ignorant and they would just put the frequency blockers back on.

Nick says:

Crap bandwidth

Having a DSL line with 6MB down and 768K up is worthless to me. When are we going to get synchronous DSL? I would much rather the Telcos take back half of my supposed 3MB down and give me 1.5MB up. I can’t believe that there is any difference whether the bandwith is up or down from the Telco side. It’s not like any of us reach 3MB speeds or 6MB for that matter.

Anonymous Coward says:

Re: Crap bandwidth

most people miss the point of slower than hell upload speeds. It is throttled in order to prevent you running a linux server from your home w/ either dynamicDNS or a static ip. This way if you need to run a server you will be required to upgrade to a business class line at a much higher rate.

Zac says:

Re: You guys have it cheap

I’m in the same boat. I can either get cable + TV for 100$ a month or 60$ a month for internet access only. The only provider is Comcast. No DSL, no Verizon, no Charter. No competition unless I want to get dialup (no way).

I can’t tell you how irritated I’ve been with this. As a software developer, dial-up VPN DOESN’T WORK. Cable is the only way to go but it is 60$ a month for sub par service, shitty automated phone-help systems, and daily bottlenecks of speed. I hope Comcast shareholders burn in hell.

anonymous coward says:

i switched from DSL to cable. If you factor in the speed of the connection, DSL is substantially more expensive.

I have 10Mb down, 750Kb up for $50. With DSL, I only had 1.5Mb down and 256Kp up for about $40 (plus two phone lines).

I switched to cable and Vonage and easily save $100/month and get a better Internet connection. One afternoon of downtime in a year. DSL would be down at least 1-2 days per month.

Neal says:

Re: Qwest

I have Qwest in Iowa. It is $30 if you bundle with a couple other services. Otherwise it will cost you $35 plus another $8 in taxes, fees, and surcharges. I just got basic phone service, no long distance. You probably have to have phone service to get DSL. My bill is about $61/month. Phone is $14 plus another $6 in taxes, fees, and surcharges (note I am being charged fees and surcharges twice). SBCYahoo! in California was much cheaper. Promotional $14.95 then full price at $29.95. You have to love the competition. Don’t have that in Iowa.

Sean says:

I switched from Cable to DSL

I switched from Brighthouse cable to Verizon DSL. I’m on the 3.0 / 768 plan, it’s cheaper, and always faster on the upload. Even though bright house (formerly time warner in my area) said I could get up to a meg upload, I couldn’t get above 300 or so during the day. With verizon, I pay $29 and get a perfect connection all the time.

NJ Tech says:

Verizon Dry Loop DSL

In NJ (Verizon) is offering Dry Loop DSL. You have to contact the local office for this though. This does not require phone service. They charge $10.00 extra for the loop + the DSL service.

Verizon has 768/128 for $14.95 for the year

you can renew at the end for the going rate.

3.0/768 $29.99 per month same deal.

You just have to keep up the 1 year contract and renew

it to keep the low rates.

Jamz says:

I agree...

Vzw DSL was finally available in my area and I jumped on it. $29.99/month (free first month, $19.99/mo for months 2 and 3…but whatever, it’s gonna be $29.99/mo). It’s just as fast as cable. I have Dish Network’s $32/month package. Spending $65 for all when Comcast was $60 for just internet. Comcast blows. Oh, and in the Vzw contract it even says that if you sign up for another year (after the initial year at $29.99/month) you can keep the $29.99/month rate. Deal.

Jamz

NJ Tech says:

Verizon Dry Loop DSL

In NJ (Verizon) is offering Dry Loop DSL. You have to contact the local office for this though. This does not require phone service. They charge $10.00 extra for the loop + the DSL service.

Verizon has 768/128 for $14.95 for the year

you can renew at the end for the going rate.

3.0/768 $29.99 per month same deal.

You just have to keep up the 1 year contract and renew

it to keep the low rates.

Realist (user link) says:

Roadrunner

Between Roadrunner, digital cable, and the majority of the movie channels, my cable bill runs a little over $150 a month. My downloads run about 600K/s – I can download a 700 meg CD ISO in less than 20 minutes. Plus I have somewhere in the neighborhood of 40-50 movie channels. It sounds like a lot of money until you realize that it pretty much covers my entire entertainment budget.

Jim Harper (user link) says:

Price . . . or Other Dimensions

Hey, Mike, you gonna ask COD for a copy of his bill? Is http://odonnellweb.com/ an industry-supported think-tank? (I’m kidding! I’m kidding! I kid! 😉

What the study seems to suggest is that DSL is the low-cost option (and getting lower), while cable is the high-bandwidth option (getting higher in bandwidth while dropping in cost more slowly). True, that diminishes head-to-head price(-only) competition because each is focused on a different niche. But they’re still in competition . . . right?

The Kagan Research analyst concludes “Eventually, cable will probably have make some reductions to cater to the lower end of the consumer market simply to get more customers.” So the study author believes more direct price competition is coming.

Mike (profile) says:

Re: Price . . . or Other Dimensions

Hey, Mike, you gonna ask COD for a copy of his bill? Is http://odonnellweb.com/ an industry-supported think-tank? (I’m kidding! I’m kidding! I kid! 😉

I know him well enough to know he’s not lying, but again he’s (a) getting a promotional rate that (b) is only good with local telephone service. I can guarantee that he doesn’t pay just $14.95 to his phone company each month.

The Kagan Research analyst concludes “Eventually, cable will probably have make some reductions to cater to the lower end of the consumer market simply to get more customers.” So the study author believes more direct price competition is coming.

Funny, we’ve been hearing that story for four years now, and the competition has only decreased during that time.

Jim Harper (user link) says:

Re: Re: Price . . . or Other Dimensions

Funny, we’ve been hearing that story for four years now, and the competition has only decreased during that time.

I quoted the research study underlying your post. Surely you don’t think the author of the study is accurate to the extent he shows lacking price competition and telling a “story” to the extent he believes it’s coming . . . .

The study shows that price has gone down for both DSL and cable. That’s evidence of some price competition – perhaps not enough.

That said, I’m not sure why *price* competition is so important. The study appears to reflect that some consumers want more bandwidth, a niche being pursued by cable. Other consumers want savings, and DSL is more for them. (You could just as easily complain about lacking “throughput competition” because DSL isn’t increasing its throughput as fast as cable.)

The study that would really be insightful is one that showed whether broadband service was priced at (or barely above) the cost of providing it. Measuring profit per unit of bandwidth sold would be the best measure of how effective price competition is, as opposed to deductive metrics like counting the number of competitors.

I’ll bet such a study would find profit to be relatively high because it’s a new market with lots of innovation happening along a lot of dimensions. Innovations give companies opportunities to profit. It’s good to give them that incentive because, as competitors close the gap, they take away the innovator’s profit opportunity, leaving the benefits of profit-driven innovation with consumers. Since the late 60’s, productivity in the U.S. has doubled, while corporate profits (as a %) are essentially flat. That means that the benefits of innovation, driven by profit, have been passed to consumers.

And just to preempt any critic who might want to leap on the idea that there is innovation happening in broadband provision, the study cited as authoritative for this post says “Cable systems have increased their download speeds to a maximum of 30 mbps, versus a 10 mbps top common just a year ago . . . .” That’s good evidence of innovation at work – I don’t think the cable providers tripled their use of year-old co-ax, routers, switches, etc.

There’s lots more market evolution to come before bandwidth is a true commodity and price becomes the only dimension along which providers can distinguish themselves.

tired of waiting says:

contract

I have had DSL with SBC for several years @$19/m, with bare bones service about $24/m (includes taxes and fed fee’s) Long Distance is another $2/month +.10 a min. (no charge for no long distance).

After the name changed to ATT they started to play rought, this year at the end of my contract they bumped my dsl up to $34 withouth notice, I have paperless billing and they say they mailed a notice not the stated billing address, but the service address…

It seems DSL month to month here is $34 and when you go on 1 year contract it’s knocked down to like $17.

In typical cardealer fashion they bill $34/month and then show a $17 discount, instead of just $17/month.

ScroodByHughes says:

Jealous in the country

I live just far enough outside of the city so that I don’t have DSL or Cable as an option. I had to either put up with cranky dialup over noisy lines (miserable connection speeds) or get satellite. Okay, I’ll pay the obscene costs for the equipment AND the installation fees, I need broadband to get anything done. So it works fine for two years, then craps out. Despite the horror stories I read on the internet about the dismal customer service, I try and get my satellite fixed.

Well, you can imagine how much fun I’m having. My satellite has been out but I have still paid for two months of service ($60/month) and for a technician to come out and repoint the dish ($120) and once again the modem is out. Now I am fighting with Hughes to get the technician to come out and ACTUALLY troubleshoot…at which point I’ll probably be told that I need to purchase a new modem (care to pony up another $400-$600, sucker??)

My point is, don’t complain about DSL or Cable when at least you **have** a choice. I either dance with the devil or sit out in the cold.

Cary says:

Drop 'em like a hot potato

I have a deal with Comcast that lasts a year. $55/month for digital cable and broadband. When it’s over, I’m switching back to DSL, where I’m sure they’ll be offering me a sweet deal to switch.

Use their own system against them. I hate comcast, but they are currently giving me a great deal. When they no longer are giving me a good deal, I’m gone. First thing I’ll do, though is see if they will extend the deal or give me another deal NOT to switch. I hate having to actually switch, but I will if it serves me.

Matthew says:

So you say so now, Cary, but the industry is counting on you being lazy. Or, perhaps they’ll get lucky and will actually BE the best offer available.

I have Cox, love them, 8meg down 1.5 meg up. Digital HD cable TV on two boxes with DVR. I pay nearly $200 a month. Yeah it is expensive, but I have all the channels except for premium HD services.

My phone service is cellular and I get by with it.

Now it vaguely sickens me that $200/month would provide 40MB down High Speed Internet for 8 or 9 residents in Korea, but I am assuming there is a good bit of governmental support in that regard.

So long as network neutrality is equal to “we’ll provide the bandwidth necessary so that all traffic is able to flow freely at practical cost” then I’m for it. This BS about needing to prioritize traffic for a fee is just the telcos being lazy. Such is the nature of things.

Nev says:

I live in Ireland....

In Ireland,

there is one main operator: Eircom

…and a few secondary operators working off eircom’s lines

Well, I’m with Eircom being charged €40 per month for a 2mb down and 256kb/ps up

..and in Ireland, that is a most awfully cheap connection fee at very high speeds

Yes, I have to admit, Ireland is being challenged with competition. They are tyrying to connect even the most remote of areas onto the ‘getting popular’ service. as for speed of connection, little advances are being made.

bmac (profile) says:

DSL vs Cable

I just switched from Time/Warner RoadRunner to AT&T (SBC) DSL in East Arkansas. RR was $44.95/month. DSL is $12.99/month for the first 12 months, and $29.99 thereafter. And although you can tell it’s slightly slower if you’re downloading large files, it’s not been a hindrance, and I use VPN to work from home, often remoting into servers, routers, etc. with no discernible difference in access speed.

I won’t go back to cable Internet at this point. Crappy customer service, always getting a busy signal on the tech support phone number, etc. has made a believer out of me. TW thinks they have a monopoly in West Tennessee and East Arkansas, but I believe DSL will overtake them as the telcos get more equipment into the field.

On the DSL side, I’ve had 3 calls from AT&T verifying that my service is up and I have no problems. That’s right: They called me. Very comforting compared to TW.

EXrider says:

Cable

I live in a suburb of South-East Indiana, and I’ve had Suscom cable internet for 3 years. It started out at $35 (with the $10 penalty for not having TV service, so might as well be $45), the service sucked, it was constantly out, and slow when it was on, it gradually got better, then they raised the price to $46, then again to $47. Finally the service is satisfactory but now Comcast just came and bought them out. Comcast told me I was getting a month of free service, then their promotional price for the next 6 months, I have no idea what it will be after that (I haven’t got a bill yet), if it’s higher than $47 I’ll be switching to Cincinnati Bell DSL.

j37hr0 (user link) says:

iProvo and MSTARMetro

I pay $39.95 for Up to 10Mbps up and down. It’s Fiber Optic to the house network which I can do ftp transfers to other users on the network at between 10 and 100 Mbps. Using NNTP servers I can pull down at about 8.5 Mbps (That’s about 1.3MBps) Depending on the server I’m uploading to, I can get between 4Mbps and 7Mbps. So I’m pretty happy with it. And I think every city should invest in a project like this for its citizens.

Qwest and Comcast hate it though…

ulle says:

no cable here

I hate phones, so no phone service here, no cable either, refuse to pay a fortune to watch garbage. For the internet we use clearwire, no phone lines or cables, just a wireless modem that has not been down more then an hour over the last year and a half and only costs $37 a month. I don’t know the exact speeds but it seems to perform just as fast as cox cable did when I had them

Someone in San Diego (user link) says:

Cox Communications in San Diego

Cox offers 3 different levels of service in SD.

Premier Service (9mbps/1mbps)
$23.20 w/ Cox Combo
$44.95 w/ Digital Cable & Telephone
$54.95

Preferred Service (6mbps/512kbps)
$16.20 w/ Cox Combo
$29.95 w/ Digital Cable & Telephone
$39.95 w/ Cable or Telephone
$49.95

Value Service (1.5mbps/256kbps)
$24.95

There are a couple of limited time offers that lower the cost for the first 4 months. I tried cut some money off my bill and they transfered me to a “specialist”. He tried up and down to talk me out of dropping services and to keep the combo. i had him on the phone adding up different posibilities and they were about $10 cheaper. I kept the damned bundle for now but am desperatley seeking alternate service. I curently pay $140 for Digital Telephone, Preferred Service internet, Digital Cable w/ 3 aditional packages, HD Channels, HBO, Starz and a HD-DVR.

I inquired Comcast, but they do not service my area. I also inquired SBC, but they said that I have to call in to speak with a rep…i’ve heard that one before!

DSL fan says:

$24.16 including taxs/fees

I was paying $17.16 (including taxes/fees) for a 1.5Mbs DSL line from DSLExtreme (its using the AT&T network). When the promotional pricing ended at the end of the year it went up to $24.16. I’m in Silicon Valley.

I could pay more for a 6Mbs connection but I found I get the same download speed for large files (typically 150- 180kbs) and it seems just as fast as Comcast cable did. My impression is that how fast/overloaded the servers are is just as important as the line speed to the central office.

US ISPs = anti-democratic fascists says:

Your ISP dictates: you may not run any server on y

It is not just the fake price war and double-taxation that pisses me off. Worse are the terms of service. The ISPs advertise unlimited Internet access, but forget to tell you, before you sign up, that you are not allowed not run your own servers on Your computer. No web server, no mail server, even no ssh server. US ISPs are as bad as the Chinese government or any fascist form of dictatorship. They only allow you to consume like sheeps.

http://www.cox.com/policy/#Subscriber_Agreement

Section 6

http://www.verizon.net/policies/tos.asp

Section 3.6.5

OhioMC says:

Cox

on Cox Cleveland cable – was paying 49.99/mo for a couple years & didn’t care `cause it was getting expensed to employer. SBC started rolling out its cheap DSL offering with Yahoo & less than a year later Cox cut my bill to a flat $40/month without me asking (smart move on their part because they don’t know my employer reimburses me)

I feel weird writing this and hope I don’t jinx myself, but the cable connection screams and is always, always on. I nervously say that I love it and cringe at the thought of waiting for pics to upload over ADSL.

of course if I knew how much they spy on me or what BroadJump software monitors, I would probably puke

Faisal says:

RCN cable is alright

Since FiOS is not available in my area, I am paying $73/month for cable internet service. My speeds are 20Mbps/2Mbps ($90 if you don’t have the TV/Internet/Phone bundle). I REALLY need the fast upload speeds because I’m running a server and you won’t believe HOW MANY people download from my server. This causes it to slow down the downloads for others. I can’t wait ’til Verizon’s FiOS 30Mbps/5Mbps service is available for only $50/month.

Viralis says:

god you all no nothing

your speed is shared between lets say 20 people if your broadband service has 20 people on the same switch as yourself, that is what is ment by the contention ratio mine is 20:1 so 20 people for 1 switch so when those 20 people are on im never going to reach my maximum speed, all broadband speed tests should be done at night say between 4-and 5 am, basically during the hours that absolutly nobody on the same switch as you are online

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