[IP] The Broadband Price War That Isn't
Begin forwarded message:
From: "Robert J.Berger" <rberger@xxxxxxx>
Date: July 17, 2005 7:35:17 PM EDT
To: Dave Farber <dave@xxxxxxxxxx>
Cc: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
Subject: The Broadband Price War That Isn't
The Broadband Price War That Isn't
Posted on 2005-07-14 13:41:39
Written by Karl Bode
http://www.broadbandreports.com/shownews/65510
Comcast speed increases have caused the newswires to rattle with talk
of a "broadband price war" despite the fact some Comcast customers
are now actually paying more. This Associated Press headline proudly
proclaims "Competition slashing costs of broadband" - But is it?.
Last week tech journalist Dana Blackenhorn railed against FCC chief
Kevin Martin for his self-congratulatory Wall Street Journal
editorial (reg. required) on the fine state of the industry.
"The fact, Mr. Martin, is that I am paying $110/month for 1+ Mbps
downloads -- that's $50 for DSL and $60 for the phone line. The
alternative from cable is equally pricey -- $70/month for the cable
and $40/month for the cable modem service."
While he puffs up the numbers for melodrama's sake (or he's the worst
comparison shopper alive), his point still hits its mark: that a
lumbering duopoly using elaborate pricing schemes are being dressed
up as vibrant competition.
Thanks largely to bundling, the broadband industry has become a
consumer market where you need a lawyer and scientific calculator to
determine if you're actually getting a good deal. Most of these
articles on "price wars" simply aren't doing the math or reading the
fine print.
The SBC $14.95 DSL deal prompted talk of a price-war with cable. Few
mentioned that price didn't include the cost of a mandatory phone
line (and associated fees). Fewer still mentioned it was a 12 month,
new-customer only on-line promotion. Even SBC investors, concerned
they were giving away the store, had to be soothed by SBC chief Ed
Whitacre that this was PR aimed at dial-up laggards.
At least the bells have been lowering prices over the past several
years. Looking for cable price-cuts in this "price war" outside of
promotional deals? There aren't any.
In fact, take a good look at the actual detail surrounding the recent
Comcast speed increases. If you don't subscribe to Comcast cable
service, you'll pay $57.95 for 4Mbps downstream service. The new
8Mbps tier for those who say - have satellite TV - will cost you
$77.95. Comcast actually raised prices for the same speeds in some
instances.
In fact, you can expect even higher cable prices once the FCC begins
a rewrite of the 1996 Telecom act, and starts forcing the cable
industry to contribute evenly to the Universal Service Fund. Price War?
---
Robert J. Berger - Internet Bandwidth Development, LLC.
Voice: 408-882-4755 eFax: +1-408-490-2868
PGP Key: http://www.ibd.com/html/rbergerPublic.gpgkey
http://www.ibd.com
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