Broadband Consumers Get More Bits for the Buck

LONDON - Residential consumer broadband prices per megabit fell in 2011, particularly in the Americas, according to British research firm Point Topic.

Over 15 months, from Q4 2009 to Q1 2011, the cost per downstream megabit for DSL, cable and fiber access declined across all regions. A 40 percent price drop was seen across Latin America (where access costs have been relatively high), followed closely by North America, at 35 percent.

The drop in cost was most dramatic for fiber access, and fiber has by far the lowest cost per megabit of any technology.

“We can see from the data that, of course, some markets are changing more rapidly than others. They tend to be where there might have been more margins in the original pricing or the operators are significantly out of step with what their competitors have managed to put together,” says Fiona Vanier, Senior Analyst at Point Topic.

Vanier says consumers want more for their money, and suppliers must compete with other technologies as well as other companies. She explains, “This isn’t about significant reductions in the monthly subscription, but about increases in the headline speed on offer.”

“Consumers still perceive speed - or downstream bandwidth, to be more precise - as a significant factor in their decision making. This works up to a point. There is evidence that residential consumers in particular are having difficulty imagining what they can do with more than 50 Mbps today, and their purchasing decisions are not driven by bandwidth as much as they used to be.”

As fiber continues to pass more homes, Vanier says, there will be no letup in the pressure for ISPs to offer better bandwidth for the money. “It will prove increasingly difficult to differentiate yourself as a broadband supplier based just on higher and higher headline bandwidths," Vanier says. "The mature broadband markets, in particular, are entering a phase where value-added services and customer relationships will be more and more important. The downside is that consumers could be seeing the end of significant increases in bandwidth or reductions in tariffs.”