Users Now Get More Bang for Broadband Buck, Says Study

Internet service providers are offering faster DSL connections for the same price in a battle for market share: Per megabit per second, prices are now 37.5 percent lower than last year, according to market research company Point Topic.

During the first quarter of 2009 the worldwide average price per megabit per second was about US$15.60, down from $25 a year earlier, according to Oliver Johnson, CEO at Point Topic.

For a given data rate, the cost of fiber and cable connections has also dropped by 20 percent and 30 percent, respectively. Currently, the cost is about $1.25 per megabit per second for fiber and $5.65 for cable.

ISPs are moving away from acquiring new customers and instead focusing on keeping the customers they have. They are also starting to pitch to different markets and differentiate their offerings. DSL is pitched as an entry level option at a relatively low total price, while cable and fiber companies push their higher speeds to more advanced users, according to Johnson.

The key to cheaper broadband and more value for the monthly fee is competition between ISPs and different technologies.

Big drops in the price per megabit per second have been seen in, for example, Western Europe, where the build-out of fiber is accelerating in countries like Germany and France, and where faster cable access is being introduced in the U.K., Johnson said.

South and East Asia have also seen big drops. In Japan various flavors of fiber now account for over 50 percent of the access market, a dominant position achieved in five years at the expense primarily of DSL, according to Point Topic data.

However, prices in the U.S. have been relatively flat, which Johnson blames on local markets that are still monopolies or duopolies.