by Mike Masnick

Filed Under:
broadband, competition, price war


Is There A Hidden Broadband Price War?

from the it's-all-in-the-speeds? dept

Last month, we mocked some mainstream press reports claiming both a broadband price war and the fact that broadband prices were rising. There doesn't really seem to be much of either, as broadband prices have remained pretty constant, even accounting for promotional pricing. However, with Comcast getting ready to significantly boost speeds (yes, with its broadband caps, Ryan Radia is wondering if the actual "price war" is hidden by the fact that it's in price per megabit.

In other words, if prices remain constant, but your speed doubles, isn't that something of a price decrease? Radia chalks this all up to competition in the market, but it should at least be admitted that the speeds (even these higher speeds) still pale in comparison to other countries where there is much greater competition than in the US, where most people still are limited to only two real choices. Either way, as someone who's still stuck on a home connection that runs around 500k (below the new 768k cutoff for "real" broadband) despite being in the center of Silicon Valley, I'm still not convinced that these greater speeds are so readily available yet.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Anonymous Coward, Oct 21st, 2008 @ 11:52pm


    If there is a cap and you are charged per GB over it, isn't raising the internet speeds designed to get you over the cap quicker?

    Aren't they just making it faster so that they can charge you more when you go over the cap?

    reply to this | link to this | view in thread ]

  2. identicon
    Mogilny, Oct 21st, 2008 @ 11:57pm

    Pseudo Price War in Canada

    The prices are falling, but so are the caps and speeds. Bell Canada dares to offer a plan with a 2GB cap and charge $2.50 for every GB over. They call it the 'Bell Internet Essential', i simply call it 'Bell Internet Crime'.

    reply to this | link to this | view in thread ]

  3. identicon
    Mogilny, Oct 22nd, 2008 @ 12:01am

    Re: Wait-

    I have 3 heavy internet users on my plan. The internet has replaced my TV. I don't think i have ever gone over 150GB per month.

    reply to this | link to this | view in thread ]

  4. identicon
    Frosty840, Oct 22nd, 2008 @ 1:48am

    In the UK, I have found exactly one network which will give me an (allegedly) unshaped 8Mb connection, and that gets me a mere 30GB per month of bandwidth.
    The cost for that is £20, which is worth somewhere between $40 and $50 depending on how crazy the economy feels today.

    The alternative is to go for an uncapped, but ludicrously over-shaped connection, for the same price, but with such bizarre restrictions as, for example, downloading more than 100MB in an hour will cut your speed to 128Kbps for the next six hours.

    The whole market has gone utterly bonkers over here.

    reply to this | link to this | view in thread ]

  5. identicon
    matt, Oct 22nd, 2008 @ 4:48am


    the lack of a corresponding cap increase means they seek to drive more people to the cap. Of course they'll sit and deny it all day as usual until 20% of their customers or so start hitting the cap. I give it about a year and a half from now before that hits critical mass (given about 6 months for full docsis 3 deployment)

    reply to this | link to this | view in thread ]

  6. icon
    jedipunk (profile), Oct 22nd, 2008 @ 5:11am

    I use netflix watch now heavily.
    Typically, a one hour show daily and one or two movies on the weekend. Very good quality video.
    I also have 1 child that is a big myspace & youtube watcher (but that amount is negligible.

    I use about 12gb a week and watch roughly 7-8 hour of tv over the internet.

    If I get rid of cable my wife will watch QVC over the internet and who know how much bandwidth that will eat.

    reply to this | link to this | view in thread ]

  7. identicon
    Revolutionary1, Oct 22nd, 2008 @ 5:34am

    My TW RR business pricing went down dramatically. Now they did create a new category of service, one for "home business users" but they now offer something they didn't before. I was paying $150/month for 4down 2up with 5 static IP's, now I pay $70/month for 15down/2up and 1 static IP. It's kinda apples to oranges, but even if I get a few more IP's it's still cheaper than what I was paying before and for a lot more bandwidth.

    reply to this | link to this | view in thread ]

  8. identicon
    CWO, Oct 22nd, 2008 @ 6:27am

    But Comcast which is mentioned in this article has a 250GB cap. Sure faster speeds will drive you to that cap faster but they're just delivering the files to you faster (when possible), not increasing the size of the files. I find it very hard to hit 250GB myself. I know there are legitimate reasons for using 250GB or more in a month but exactly how many RESIDENTIAL reasons are there to hit it (as opposed to business). Just don't keep your P2P seeding all night and the faster speed shouldn't really make you hit your cap that much faster...

    reply to this | link to this | view in thread ]

  9. identicon
    moe, Oct 22nd, 2008 @ 6:34am

    Re: Wait-

    I think you're misunderstanding the concept.

    If you d/l 50 MB at 1 MB/s, then it takes you 50 seconds.

    If you d/l 50 MB at 10 MB/s, then it takes you 5 seconds.

    It's still only 50 MB.

    reply to this | link to this | view in thread ]

  10. identicon
    moe, Oct 22nd, 2008 @ 6:35am

    There's something going on.

    reply to this | link to this | view in thread ]

  11. identicon
    moe, Oct 22nd, 2008 @ 6:38am

    Re: There's something going on.

    Ok, must have an itchy trigger finger.

    Anyhow, there is some kind of price war going on, but maybe it's not just in the data market. It's important to look at the whole enchilada because every broadband provider offering data, phone, and tv.

    For example, I just signed up for Verizon FiOS. I'm getting 200+ channels (some in HD) and a 20/5 internet connection for about $105/month.

    The price war is in the bundles. Cable is trying to grow its data market and telecom is trying to grow its tv market.

    reply to this | link to this | view in thread ]

  12. identicon
    adam, Oct 22nd, 2008 @ 7:33am

    doubled speed

    My cable broadband provider, Wide Open West, just sent me a postcard yesterday saying they had bumped me up to a 15Mbps level from 6Mbps for free. I power cycled my modem, and voila! Speedier internet at no additional cost. WOW, which has no data limit, is in direct competition with Time Warner and AT&T in my neighborhood.

    reply to this | link to this | view in thread ]

  13. identicon
    Mark Regan, Oct 22nd, 2008 @ 8:06am

    Meanwhile, Back At The Ranch

    The rest of us in rural America are still waiting for any pretense of civilization. We live two miles away from a major Interstate Highway, one half mile outside the city limits, and cannot get city water, city sewage, cable tv, landline telephone, cellphone service, or more than one or two over the air tv stations (depending upon how high your tv antenna is). Low speed internet service is still a dream. High Speed? What's that?

    Our system of corporate monopolies skimming off the high-profit urban area business, and providing NO service to the rest of the country is a CRIME and relegates America's rural areas to a future akin to central Africa.

    It is time to nationalize the industries providing essential services. It is grossly unfair that an unemployed welfare recipient in any urban center can get economical and affordable phone and hi-speed internet service, but hard working rural residents can get NOTHING.

    Maybe we should kill all our cattle and poison our corn and watch you big city folks starve while you call each other on your cell phones and download movies on your computer. Our city doesn't even have a theater or a shopping center.

    But if Obama tries to help the poor folks in rural areas McCain accuses him of being a Socialist. How will we ever convince ATT to install telephone poles here when they can make more money installing fiber optic in an urban area for the same investment and get MUCH more return on their money from the metropolitan area. Capitalism Sucks!

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, Oct 22nd, 2008 @ 8:30am

    Re: Meanwhile, Back At The Ranch

    I certainly empathize with you since I live in a rural area where my only option for anything resembling high speed internet is a cellular modem or satellite system. What makes it worse, the "local" telephone company, CenturyTel by name, deploys wireless internet in a local city where they already have wired service. I thought those extra charges we pay on our phone bills were supposed to be used to help deploy service to areas that don't have it.

    reply to this | link to this | view in thread ]

  15. identicon
    nasch, Oct 22nd, 2008 @ 9:07am

    Re: Re: Wait-

    The concept is that if you only have 1MB/s maybe you watch YouTube videos, and if you have 10, then maybe you download DVD-quality or HD videos because it's practical to do so. That would mean you're downloading a lot more bits per month.

    reply to this | link to this | view in thread ]

  16. identicon
    MicroFace, Oct 22nd, 2008 @ 9:29am

    There is no competition in my area

    I Live 1 hour outside of Sacramento, CA and I can tell you that over half the population is still on Dial-up or cable because they have no access to DSL. In many cases they can not use satellite simply because there is no proper exposure, or the exposure is masked by trees.
    The only competition here is to increase our rates every year for the same bandwidth, with no further coverage.
    The AT&T company even went so far as to tell the business I work in that is 1700 feet from the exchange that even though we had a useable DSL connection, before that since this company is outside the 1,500 radius to the exchange box that AT&T would no longer provide DSL. Thus this company was forced to "Upgrade" to a leased line at twice the expense. Since there is no other provider of internet services in this entire area, even though this is a soft industrial park with over 3 dozen companies, we are SOL, we can pay up or have no internet connection. So don't talk about competition to me, it does not exist anywhere in this area.

    reply to this | link to this | view in thread ]

  17. identicon
    Mumble, Oct 22nd, 2008 @ 9:54am

    Guess who is trying to provide broadband here?

    The electricity cooperative - not the telcos! If the electricity were distributed by telcos, we would just not have power where I live, much less broadband. To make it worse, Sprint/Embarq have traditionally made it hard for the one dial-up provider to operate in the area.

    reply to this | link to this | view in thread ]

  18. icon
    Derek Kerton (profile), Oct 22nd, 2008 @ 10:01am

    Re: Meanwhile, Back At The Ranch

    Commenter 13: Ever hear of Universal Service Fund? Big cities, which are dense and thus profitable to serve, have been subsidizing phone, mail, road, electricity, and rail connections to rural areas since the dawn of the country. I didn't notice you complaining that your mail costs the same stamp as mine does.

    How about this: next time I'm stuck in traffic, driving my kids to their crappy schools, choking on the pollution, paying for my parking, and then waiting in a line ten deep for my frappuccino double whip latte, I'll shed a tear for rural America.

    Listen, there are benefits to living in the city, and there are benefits to living in the country. American is still relatively free, so you can choose which lifestyle you want among those options. I drive through the country and I get jealous of the bucolic lifestyle you guys get to enjoy, as I race home Sunday night to the city. But I don't ask you to ship your clean air into my town, so pleased don't complain that your Internet is more expensive or less accessible than mine. Or at least recognize and be gracious that the bulk of subsidies on utilities DO go your direction.

    reply to this | link to this | view in thread ]

  19. icon
    Derek Kerton (profile), Oct 22nd, 2008 @ 10:11am

    In Defense Of Comcast

    People, a rise in speed with no change in price is a big improvement, no if ands or buts. Sure, you can hit your caps sooner. But faster is better. Most, and by far most people, don't hit their caps, so faster is nothing but a pure improvement.

    There are a few characteristics of a broadband service. Price, speed, and throughput are the most obvious. Comcast improves an important one of those characteristics, and people are angry enough to complain that the other two didn't improve? Seems petty. You may hate Comcast for whatever reason (I've had mine*), but you should recognize a good thing when you see it.

    For example, commenter #15...well, isn't that a good thing? Sure, you might hit your cap, but the speed boost has improved your viewing quality from youtube to HD. And you want to complain? If you don't like it, just keep watching youtube.

    Am I a Comcast shill, nope, see:

    reply to this | link to this | view in thread ]

  20. identicon
    Ryan Radia, Oct 22nd, 2008 @ 10:25am

    Re: Wait-

    Only a tiny fraction of users even approach the 250GB limit. And faster speed means you get the same data as before, but downloads take much less time. Doubling speeds surely doesn't mean for most users that demand for raw bytes transferred will also double.

    reply to this | link to this | view in thread ]

  21. identicon
    Ryan Radia, Oct 22nd, 2008 @ 10:29am

    Re: Re: Meanwhile, Back At The Ranch

    Well said. Living in rural areas has lots of serious advantages, as you point out, but also some drawbacks--namely, fewer reasonably-priced ISP options.

    I doubt rural dwellers will be forever doomed to crappy broadband. Sure, your average urban house will almost always beat out rural homes, but wireless technologies like LTE and Wi-Max are much more economical for sparsely populated areas from a per connection standpoint. In a couple years, assuming more spectrum is freed up by the FCC, odds are consumers who live in rural areas will broadband service comparable to what Comcast is offering today in certain markets.

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, Oct 22nd, 2008 @ 10:35am

    Re: Meanwhile, Back At The Ranch

    I am disinclined to subsidize your life out on the ranch. Suck it up or move to the city.

    reply to this | link to this | view in thread ]

  23. identicon
    Joe, Oct 30th, 2008 @ 12:22pm


    ??? 20 pounds hasn't been equal 40 to 50 dollars in years .
    currently the pound is going for 1.64444 thus equaling $32.888 the best its been for the past 10 days

    reply to this | link to this | view in thread ]

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