Skip to main content

Why Residential Broadband in U.S. Should Cost Less

According the the latest market study by Point Topic, there's a pattern of broadband access cross-subsidization across most parts of the world.

"Residential broadband is apparently being subsidized by businesses almost everywhere in the world -- the exception is North America," says Oliver Johnson, CEO of Point Topic.

Internet Service Providers (ISPs) in most markets are charging households considerably less than businesses for Internet access. This is a mechanism to cope with competitive pressure and gain residential subscriber market share.

"There are a number of differences of course. Business tariffs often are less contended than residential ones and come with better help desk services and guarantees of up-time but surprisingly not generally faster," continues Johnson.

Add to this the exchange rates, the relative buying power of a dollar in a particular market and so on and it's a very complex picture. As a simple exercise however we can examine the relative ratios of the average of 2000 residential and business tariffs in different regions of the world.

"By looking at just standalone tariffs, those without a VoIP or IPTV service, we can assume that between markets we are comparing similar products overall -- that is to say just the bandwidth," says Johnson.

In North America (USA and Canada) a business will pay 2.38 times as much for a DSL connection as a household. This compares to a multiple of 4.23 on average in the Rest of the World (RoW).

In North America a business will pay 1.13 times as much as a household for FTTx and 1.89 times as much for a cable service. In the RoW a business will on average pay 6.47 times as much for FTTx and for cable the multiple is 1.93 times.

The result is that households in the U.S. and Canada will typically pay between 10 and 20 percent more for their broadband service than their counterparts in other regions of the world.

The gap is at least partly due to the differential in residential and business tariffs. North American operators are extracting a better ARPU from their household services while sacrificing some revenue from companies.

"This approach may be more robust in the medium to long term but it's also an opportunity. Where there actually is competition in the North American region there is room for price cuts for residential customers and a gain in market share for the operators that are prepared to take the plunge," concludes Johnson.

Popular posts from this blog

AI-Driven Data Center Liquid Cooling Demand

The rapid evolution of artificial intelligence (AI) and hyperscale cloud computing is fundamentally reshaping data center infrastructure, and liquid cooling is emerging as an indispensable solution. As traditional air-cooled systems reach their physical limits, the IT industry is under pressure to adopt more efficient thermal management strategies to meet growing demands, while complying with stringent environmental regulations. Liquid Cooling Market Development The latest ABI Research analysis reveals momentum in liquid cooling adoption. Installations are forecast to quadruple between 2023 and 2030. The market will reach $3.7 billion in value by the decade's end, with a CAGR of 22 percent. The urgency behind these numbers becomes clear when examining energy metrics: liquid cooling systems demonstrate 40 percent greater energy efficiency when compared to conventional air-cooling architectures, while simultaneously enabling ~300-500 percent increases in computational density per rac...