Technology | Media | Telecommunications

Thursday, May 13, 2010

How Broadband Service Value Varies Worldwide

The price of a megabit of bandwidth has dropped across all delivery technologies in the first quarter of 2010, according to the latest global market study by Point Topic.

"In the last 12 months the price of bandwidth over fiber has dropped by just over 7 percent. In the same period DSL bandwidth costs fell twice that, but the real movement has been in cable bandwidth which is almost 20 percent cheaper per megabit than 12 months ago on a worldwide basis," says Fiona Vanier, Senior Analyst at Point Topic.

Cable subscription prices have changed slightly, but bandwidth has changed dramatically. From an average of 1.7Mb in 2005, passing 10Mb in early 2008 and now the average advertised bandwidth over a cable connection is just over 17Mb.

In comparison DSL has increased from 5.5Mb offered on average in 2008 to 5.7Mb today.

The increase in speed has been a major factor in the success of cable over the years. They've been able to offer customers much higher bandwidth for little or no corresponding increase in price. This has been one of the core elements in keeping them competitive.

Europe in particular has seen speeds increased by over 300 percent since early 2008 -- while the price declined over 8 percent in the same period. In contrast, North America prices have increased by 17 percent and speeds have only increased by about 66 percent.

Cable in the Asia-Pacific region is subject to significantly more competition, at least historically, from super high speed fiber-based broadband offerings.

"While there are fewer cable operators, they have been facing fiber competition for longer than their western counterparts. This means they were forced to increase the bandwidth offered years ago just to offer a realistic alternative. Now operators are casting around to see what else they can do," says Vanier.

The recent moves by Telstra, the Australian incumbent telco, which resulted in a significant price increase in the region may be a sign that they are looking at increasing ARPU, rather than relying on growth in new subscriber numbers. Perhaps that's why the Australian government has decided to introduce new competition.