What is the Price of Broadband?

David Byrd : Raven Call
David Byrd
David Byrd is the Founder and Chief Creative Officer for Raven Guru Marketing. Previously, he was the CMO and EVP of Sales for CloudRoute. Prior to CloudRoute, He was CMO at ANPI, CMO & EVP of Sales at Broadvox, VP of channels and Alliances for Telcordia and Director of eBusiness development with i2 Technologies.He has also held executive positions with Planet Hollywood Online, Hewlett-Packard, Tandem Computers, Sprint and Ericsson.
| Raven Guru Marketing http://www.ravenguru.com/

What is the Price of Broadband?

Price of BroadbandA 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 increased. In fact, it has remained stable or gone up in some cases. Second, a discussion of price needs to be objective and compared to a leader or at a minimum a norm. Over the last few years I have invested considerable time in understanding broadband pricing as it pertains to income and global competition.

The US faces a technological challenge in remaining the world’s 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 Japan, UK, China, India and Sweden. We had the highest average monthly price of the six countries.

Japan $34.21
UK $33.34
China $13.25
India $22.00
Sweden $34.00
United States $53.06

Using data from the Organization for Economic Co-operation and Development (OECD) and 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 UK is in the middle at $.61 with the US at the higher end at $1.10.

The White House report presents U.S. pricing in 2011 as “… 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 connections 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.

I’ll cover the state of wireless broadband on Monday.

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