Global bandwidth costs continue to decrease

UK: Residential consumer broadband prices per megabit have continued to fall in 2011, particularly across the Americas, according to the latest broadband tariff analysis from Point Topic.

Regional pricing for the three main fixed line technologies – DSL, cable and fibre – between the world’s regions over a period of 15 months are compared in the report, from Q4 2009 to Q1 2011. The cost per megabit has declined across all regions but a significant 40 percent price drop has been seen across Latin America, followed closely by North America and Canada at 35 percent across all technologies.

“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,” said Fiona Vanier, senior analyst at Point Topic.Source: Point Topic.

Downward pressure on the cost of bandwidth is constant. Consumers want more for their money and suppliers are often in competitive market places where the challenge comes from other technologies as well as other companies.

“The price per megabit of bandwidth in Latin America has dropped by an average of over 40 percent and in North America and Canada by over 35 percent across all the fixed line technologies. This isn’t about significant reductions in the monthly subscription but about increases in the headline speed on offer,” said Vanier.

“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 50Mbps today and their purchasing decisions are not driven by bandwidth as much as they used to be.”

As fibre continues to pass more and more homes there will be no let-up in the pressure for ISPs to offer more for the consumers’ money.

“It will prove increasingly difficult to differentiate yourself as a broadband supplier based just on higher and higher headline bandwidths. 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,” concluded Vanier.