When a City Has Gigabit Internet, Prices For Slower Speed Tiers Drop: Study (arstechnica.com) 42
A new industry-funded research study, titled "Broadband competition helps to lower prices and faster download speeds for U.S. residential consumers," analyzed DSL, cable, and fiber broadband plans from the 100 largest designated market areas in the U.S. and found that when a city has gigabit internet speeds, the price of plans with slower speeds drop. Therefore, customers who don't purchase gigabit internet plans will still benefit from their availability. Ars Technica highlights the key findings of the study in their report: -The presence of gigabit service in a market is associated with a $27 decrease in the average monthly price of broadband plans with speeds of 100Mbps or greater but less than 1Gbps. That's a 25 percent price reduction.
-Markets with gigabit Internet also see smaller price decreases for plans as slow as 25Mbps. The presence of gigabit Internet has no significant effect on prices of plans with speeds below 25Mbps. This isn't that surprising since the slowest plans are already the cheapest and aren't suitable substitutes for gigabit speeds.
-Gigabit prices decline when at least two providers offer gigabit service. "If a DMA moves from having one to two providers of gigabit Internet, we estimate that the standard monthly price for gigabit Internet will decline by approximately $57 to $62, which is equal to a reduction in price of between 34 and 37 percent," the study said. Going from one to three gigabit competitors would reduce prices by an estimated $98.11 to $106.50 per month.
-Competition at any speed reduces prices. "An increase of one competitor is associated with approximately a $1.50 decline in the monthly standard broadband price for Internet plans with speeds ranging from 50Mbps to less than 1Gbps," the study said. For plans with download speeds of less than 25Mbps, the decrease in average monthly price is $0.42 for each competitor.
-Availability of fast speeds increases the likelihood that other ISPs will introduce their own higher-speed plans to match competitors. "In particular, we find that each additional competitor offering broadband in a higher speed category will increase the probability that other broadband providers in the market will offer broadband at those higher speeds by 4 to 17 percent on an annual basis," the study said.
-Average monthly prices for each speed category are as follows: $52.60 for speeds less than 25Mbps; $74.05 for plans from 25Mbps to 99Mbps; $108.52 for plans of least 100Mbps but less than 1Gbps; and $165.63 for speeds of at least 1Gbps.
-Markets with gigabit Internet also see smaller price decreases for plans as slow as 25Mbps. The presence of gigabit Internet has no significant effect on prices of plans with speeds below 25Mbps. This isn't that surprising since the slowest plans are already the cheapest and aren't suitable substitutes for gigabit speeds.
-Gigabit prices decline when at least two providers offer gigabit service. "If a DMA moves from having one to two providers of gigabit Internet, we estimate that the standard monthly price for gigabit Internet will decline by approximately $57 to $62, which is equal to a reduction in price of between 34 and 37 percent," the study said. Going from one to three gigabit competitors would reduce prices by an estimated $98.11 to $106.50 per month.
-Competition at any speed reduces prices. "An increase of one competitor is associated with approximately a $1.50 decline in the monthly standard broadband price for Internet plans with speeds ranging from 50Mbps to less than 1Gbps," the study said. For plans with download speeds of less than 25Mbps, the decrease in average monthly price is $0.42 for each competitor.
-Availability of fast speeds increases the likelihood that other ISPs will introduce their own higher-speed plans to match competitors. "In particular, we find that each additional competitor offering broadband in a higher speed category will increase the probability that other broadband providers in the market will offer broadband at those higher speeds by 4 to 17 percent on an annual basis," the study said.
-Average monthly prices for each speed category are as follows: $52.60 for speeds less than 25Mbps; $74.05 for plans from 25Mbps to 99Mbps; $108.52 for plans of least 100Mbps but less than 1Gbps; and $165.63 for speeds of at least 1Gbps.
Supply vs. demand phenomena discovered. Again. (Score:5, Insightful)
Really amazing work here.
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So amazing that Captain Obvious didn't even feel the need to show up.
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Agreed!
I was going to post the same with following title:
"The greatest study that I ever found so far..."
We have different definitions of cheap (Score:2, Insightful)
When the cheapest internet you can buy is almost $50 it's still far more expensive than it should be for low income access. Basic services should only be $20 for phone, internet, or TV yet we see more than double that. When compared to other countries in the world we are far more expensive for far less service.
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When the cheapest internet you can buy is almost $50 it's still far more expensive than it should be for low income access. Basic services should only be $20 for phone, internet, or TV yet we see more than double that. When compared to other countries in the world we are far more expensive for far less service.
If you want really cheap with limited bandwidth/quota (like <20GB/month), then normally mobile broadband is the best solution. A wired connection will always have a lot of fixed overhead no matter what you do. here in Norway it's about $35 for a basic ADSL line, but very often you get close to 10x the speed for 2x the price like 5/1 -> 60/20 ADSL, 30/10 -> 250/30 cable, 50/50 -> 500/500 fiber. It's clear that having a connection and barely using it is a poor value for everyone involved.
And the p
In other news (Score:5, Funny)
Little guys don't need less red tape (Score:2)
Unless if by "red tape" you mean repealing minimum wage and eliminating OSHA. I guess that'd work, but then they'd still have to compete with the mega-corps who are also paying like shit and using employees like toilet paper.
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So you want to craft an economic system that would allow say 100 competing fibre to the premise services to run past your property. Tell me when you get there, it'll be interesting to see that particular fantasy. There are plenty of areas within all economies where competition is impossible. Compete on medical services, how do you negotiate emergency surgery, would any moron be stupid enough to take the lowest tender for a life saving operation. How about competing armies, that'll be fun, although most woul
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You think that insurance companies don't negotiate? What do you think medical networks are?
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Do you know how well your insurance company will work prior to making a claim, no but you are most certainly screwed when paying for 10 year and they decide, nope, not paying for that one, go else where, well damn.
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Oh cool the city fiber here is a member.
Here in SLC (Score:1)
Here in SLC I have gigbit fiber to home for $69 (about 76 with taxes) per month. 5 years ago when I bought my house the fastest available was 20mbs.
Competition, just like other countries! (Score:2, Insightful)
US Internet is slower than foreign countries with lower population density and much more expensive. Why aren't more people complaining about lack of competition in it?
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Anyhoodles (Score:2)
It's years down the road where it becomes a problem.
Dictatorships seize what was free market infrastructure, and, gosh!, is everything great -- see how great I am, the politician who brought you this!!! Then years down the road, when it gets old, and real competition is killed off, do the failures manifest.
See Venezuela for a recent example, or Cuba with 50 year old American cars held together with twine, for examples.
"But as long as there are free markets somewhere on the planet, we can re-buy upgrades!!!
What can I get for $10? (Score:2)
When everyone has 10Gbit, I wonder what I can get for $10?
There are parts of the US where you can get 25MBps for under $25.
I really only need like 5MBps.