Broadband Prices Stable in US, Declining in Other Countries

Residential broadband prices in the United States remained fairly stable over the past few years, according to Scott Wallsten and James Riso in a new study by the Technology Policy Institute. However, that news isn't entirely good - in most other developed countries, residential broadband prices have been falling rapidly.

Wallsten and Riso, TPI vice president for research and research associate, respectively, constructed a data set of 25,000 broadband plans offered by almost 170 firms in 30 OECD countries. Analysis of the data showed:

- U.S. residential broadband prices remained stable over the past three years but have fallen in most other countries. Prices for residential stand-alone and triple-play plans remained stable overall, although prices for stand-alone plans with speeds above 25 Mbps - which account for only 1 percent of total subscribers - have increased by 25 percent. Residential broadband prices have fallen in most other OECD countries, some by as much as 40 percent.

- U.S. business broadband prices have decreased by 15 to 25 percent. Faster broadband plans have shown the largest decrease in price - more than 30 percent - but the data show almost no change in plans with slower speeds.

- Prices for stand-alone broadband plans in the U.S. are in the middle range of OECD countries, though they are "closer to the leaders than to the laggards." Business stand-alone broadband plans ranked squarely in the middle of the price ranges across countries.

- Prices for triple-play plans in the U.S are among the most expensive for OECD countries. However, triple-play pricing varied widely across countries. Such dramatic differences in price could be explained by the inability to control for the type of programming in the video packages in the analysis.

The authors did not evaluate the policies and other influences that impact those prices, nor did they try to determine the ideal price for broadband. "In the short run, consumers are better off when prices are low and falling," the authors state. "Ultimately, though, it is difficult to determine if prices are 'too high' or 'too low,' and both have implications for future investment and innovation."