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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  1. identicon
    Jim Harper, 11 Jul 2006 @ 1:35pm

    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.

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