UK broadband researcher Point Topic says that the underlying cost of broadband, the price for each megabyte of data, is still falling, but falling far more slowly than in recent quarters.
The price is downward for two of the three primary access technologies, cable and DSL, but fiber costs, because they already offer such good value for money, are holding up.
‘Competition between operators and across the technologies is continuing the downward pressure on DSL and cable pricing per megabit. Fiber however doesn’t have to work quite so hard. Partly because it’s a relative newcomer in many markets, but even where it’s established, FTTx offers such good value for money, on this measure at least, that it has some breathing space,’ says Fiona Vanier, Senior Analyst at Point Topic.
Point Topic tracks a representative selection of operators and entry level tariffs to allow comparisons over time between pricing and the speeds on offer.
According to the data the DSL price per megabit has dropped by almost 30% in the 12 months from Q4 2008 to Q4 2009, cable by just over 23%, while the bandwidth cost of fiber has increased by 2.1% in the same period.
Operators have overall been raising prices of the entry level services they offer in the last few months, particularly for DSL. They have achieved an overall reduction in the price per megabit by increasing speeds, or at least the headline speeds they quote for the services, Point Topic says. In fact all of its calculations are based on the advertised speed and not what the consumer actually experiences.
Point Topic also pointed out that there are significant differences in consumer pricing in the different regions of the world.
‘If we analyze our whole database of tariffs for residential broadband services, which comes to just under a thousand worldwide for DSL, cable and fiber, we can see some distinct differences. For example DSL bandwidth is 6 times more expensive in the Middle East and Africa compared to Asia Pacific, while fiber costs twice as much per megabit in North America as it does in Western Europe,’ says Vanier.
Point Topic says that where there is a high level of competition between suppliers using the same technology, there is lower pricing. ‘Speeds on offer in North America are generally lower than in Europe and comparable services cost significantly more,’ says Vanier.