Overall the amount consumers pay for a megabit of bandwidth is still on a downward trend across two of the three primary access technologies but where they are decreasing it is more slowly than in previous quarters.
“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 worldwide 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,” says Vanier. ”It should be noted these calculations are based on the advertised speed and not what the consumer actually experiences. A number of factors can reduce the bandwidth available, contention being a leading example, so the drop in bandwidth costs may not be as dramatic as the raw data suggests,” she warns.
Cable broadband has been the most heavily discounted over the last five years across the operators and markets that Point Topic tracks for this analysis reflecting the competition between the providers and the access technologies.
Regional variations are considerable.There are significant differences in consumer pricing in the different regions of the world.
“If we analyse 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.
This analysis does not account for variations in local purchasing power and is based on direct currency conversion. Sample size for cable tariffs in SE Asia and fiber in MEA too small for inclusion.
“Over the years we can track a correlation between markets that have a high level of competition, in particular service as opposed to infrastructure competition, and relatively low bandwidth pricing. The general case for infrastructure competition has been that it’s the primary way of stimulating innovation and development in the back haul and local loop but this doesn’t seem to be borne out by the evidence to date. Speeds on offer in North America for example are generally lower than in Europe and comparable services cost significantly more,” says Vanier.
