Friday, September 03, 2010

Businesses Still Pay More For Speed and Likely Always Will

From the 2nd Quarter Global Broadband statistics report from Point Topic and a little bit of leg work of my own (ok no leg work, only finger work) some of the latest broadband prices per megabit in the US were encouraging.
For DSL service, they still offer the lowest monthly rate but it works out to the highest per megabit price -  1mbps download at $20/month or $20 per meg of bandwidth speed.
The best DSL price was $40/mo for up to 7 mbps speed or about $5.70/meg
For Cable offerings, Comcasts best deal was 50mbps for about $115/mo (for the first 6 months):  that works out to an amazing $2.30/meg!
Fiber technology still growing with the main supplier in the US being Verizon Fios whose top matching plan is 50mbps at about $140/month for and average $2.80/meg, a big drop from when it first rolled out.
Note: Being the speed freak I am, of course I am focusing on the top available speed plans of the three and please note these are also the residential options only.
The business internet plans are still pricier from the three main technology sources, but here is what is interesting and also what most business customers don't know:  The higher prices businesses often pay for their service, is used to offset the carrier costs of the residential offerings!
Shocker, I know!
Actually this is common practice, and is a strategic business plan to be able to focus on the bulk of their customer base which are residential consumers.

What Point Topic's global Q2 report shows however, is that the cable suppliers have been able to bring the costs for their business clients down much closer to that of the residential broadband customers. That cost for businesses is roughly 1.5 times that of home owners, while business DSL is 3.9 higher and Fiber is 4.7 times higher than their comparable residential services.

Rest assured, those ratios will change. DSL, I do not expect will change much as providers just are not able to gain the numbers of residential clients needed to balance with the smaller amount of business clients. Fiber however is the broadband highway to the future. What is being laid out now in terms of fiber lines, has such longevity and capacity that providers costs will drop as the service becomes available to more and more clients. That 4.7 ratio is sure to drop as the service becomes available in more countries, and across more areas within existing fiber countries.


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