Why is a high speed internet connection so expensive? (1 Viewer)

[BrettB]

I'm pretty sure when I checked into my DSL/cable modem options about 1.5 years ago it was about $35 (possibly $40). I figured I'd wait for the competition to drive the price down and get it later. Well, it's later now and the going rate is $50.
What the hell is going on? Is there a large enough customer base that they've already moved into the recouping of investment phase? Will the price drop after a sufficient amount of recouping has occured?
I'm not gonna waste my time with 56K but I can't bring myself to spend $50/month either. Please tell me it's gonna get cheaper.

 

[John Thomas]

It's very similar to compact discs in the sense that time has gone by and the cost has only gone up. I suppose it's due to the demand rising or at least levelling out. You would think however that pressure would come from those that advertise online and rely on people with broadband connections to download their ads.

 

[Leila Dougan]

As I see it, prices were cheaper 2 years ago because at the time, broadband companies (cable at least) such as @Home were operating severely in the red. @Home was, actually, LOSING money on every customer they got and so their demise was inevitable. After they went bankrupt and the cable companies got a clue and decided to provide the service themselves. They certainly aren't going to stand to let their internet side-business bring down the whole company, so they are out to make a profit, or at least break even.

The reason prices went up was simply due to experience. Just like the whole dotcom fiasco where 2-3 years ago you could get all sorts of things for free, the companies now have to charge/charge more to stay afloat.

I worked for a well-known ISP for a few years, mainly in the dialup division but let me tell you. . .ISPs make a heck of a lot more money off dialup customers than they do broadband. In the broadband business, profit margins are just too low, but hopefully the increase in price over the past few years will lend some stability to the industry.

 

[MikeAlletto]

Plus as more customers get cable modems or dsl there is only so much bandwidth to go around. So the more people that have it the more money that the providers must spend to upgrade everything to keep the bandwidth constant. I think its worth the price but wish there weren't speed caps. Cable companies still don't know how to sell this stuff though and they will never learn.

 

[Todd Hochard]

If you've got cable, your cable co. may cut you a break on the rate for combined services. Mine does (never mind the rape on the cable rates to begin with )
I don't think the pricing is ever going to get cheaper. You can't really say that it's way more expensive than dialup, if you consider dialup on equal terms. How much would dialup cost if you wanted an always on connection? $20 for account, plus $15-20 for another line. Now, we're at $40/month for always on dialup (if your provider would allow that- most will boot you when idle). Now, is it worth an extra $10 (or $0 if you have cable- my rate is $38 because of the combined discount) to have your download speed go from 5KB/sec to about 200-300KB/sec (from a good site)? You decide.
Todd

 

[Hakan Powers]

I'm lucky.. I have a 10Mbit ethernet connection to my appartment that costs me about $30/month.

I really do hope my ISP survives...

 

[Lee Carbray]

Much cheeper up here in Canada too. dsl or cable average is about $40 can per month.

 

[KyleS]

Its pure cost of the equipment/man power to provide the service to consumers. Take DSL for example. Maximum normal operating range from the office is 15-16K feet and from that point on they have to run additonal T-1 (or multiple T-1's) to another location to expand out further and that extra HUB runs approx 40K-50K for the phone company. How long do you think it takes them to make back there money back from only getting 50-75 per month per person? Its a very tight line right now unless the cost of their equipment/man power goes down.

KyleS

 

[Alex Spindler]

One other change is that customers are using their connections more than ever. Whether it is based on an increase in the general complexity and size of the web pages and files they run into on the Internet or by the use of file sharing programs which increase their average usage, the network is going to constantly require augmentation to prevent slower speeds (and angrier customers).

So, to create an HTF parallel, not only have the dotcommers gone bust and the only place to buy are B&Ms who sell at MSRP, but everyone requires each release to be 4-disc special editions, meaning the costs have gone up.

 

[Joe Szott]

Y'all are half right and half wrong. The newer companies were operating at a loss to gain share, and the equipment/infrastructure was expensive, but the other half was the government.

Back about 5 years, the high speed structure was considered semi-public property, like long distance phone lines, electric power, or a similar product. So companies like Qwest, Bell, and others were legally *forced* to share their infrastructure with ISPs that could afford to rent a piece of the line. So even if you had bomb.com DSL service, you paid bomb.com for an ISP and bomb.com paid Bell to use their DSL infrastructure. Bell, Qwest, and others couldn't charge too much as everyone would just go with a smaller company that rented space from them. Just like how now if you don't like AT&T long distance, you can go with TTL, Sprint, or whomever (even though AT&T might have built the actual phone lines.)

So the big telecom companies rallied congress, and got a law passed that said high speed internet was not a semi-public resource, but that they owned the infrastructure they built. They don't have to share 1 Mbit with anyone they don't want to and they have no obligation to provide the service if they choose not to. Poof! Overnight half of the bomb.com companies collapsed and the telecom owners could charge whatever they want. So now in our 'land of the free' you get to pay $60 for what they charged $30 for 5 years ago because the gov't squashed any competition for these huge telecom corporations.

Write your congressman and get pissed. It helps...

 

[John Tillman]

I think it has become the cash cow to the cable companies. They have invested heavy dollars to set up their systems and now they must get a return on the $'s spent. Monopoly city.

For a long long time, they had a monopoly on the TV side. I got my revenge by going to Dish. If Cable wants me back they're going to have to inject my Elite 610 with a full pallet of 1080i. Till then, I'm gone.

 

[Karl_O]

Let us not get into politics shall we?

 

[Ross Williams]

How long till the dish companies start offering internet service? That might help to drive down prices.

 

[Leila Dougan]

Dish companies have been offering internet access for quite some time now. It never really caught on because it is extremely expensive and there is incredible latency (much more so than a dialup connection). Out here in NM there are many rural areas and I know several people who use satelite internet access because there are no local dialup numbers and certainly no cable (internet or TV) or DSL. Most people have something available that is much more affordable and convenient.

 

[Travis Hedger]

Around here in Oklahoma City, prices have been going up.

When it first came it was $29.99 if you already had Video service, $39.99 without.

$15 for cable modem rental, but if you owned it outright you were saving that $15.

Then, over the course of last year, they increased the rates by $10 so now it is $39.99 with cable and $49.99 without.

And the $39.99 is really $49.99 because their lowest price cable is $10, so in effect there is no discount because their "limited" basic is channels that you wouldn't watch.

And all this was after Cox took over what used to be Multimedia Cable vision.

I have since cancelled my services as they called me a video pirate (long story, but I wasn't pirating video) and I use my works broadband, so I save my $50 and went to DirecTV with TiVo.

Sure I miss high speed at home, but I refuse to be raped by the local monopoly.

 

[AaronNWilson]

I pay $35 CAD for my cable connection (bought the modem for $60) and I get 5.5/0.5 megabits.

 

[Todd Hochard]

but that they owned the infrastructure they built. They don't have to share 1 Mbit with anyone they don't want to and they have no obligation to provide the service if they choose not to.

Is your assertion that they shouldn't own what they built? That it should be public domain, even though private enterprise put it together, at great expense (some nearly bankrupting)?

That doesn't make any sense.

 

[andrew markworthy]

It's about 30 pounds a month over here in the UK.

I think over time it'll come down in price. I wouldn't do without broadband - it's just too convenient.

 

[MikeH1]

In Alberta, Canada I pay $35.00 a month using Telus, a DSL service. This seems quite resonable to me just for the fact that basic cable (about 20 channels of which maybe 5 are actually worth watching) is close to $25.00. I get a lot more out of my computer for the extra 10 dollars than I could watching lame reality television. And as far as dial up vs broadband goes, dial up is only 10 dollers or so cheaper. No contest.

 

[Lee L]

Is the Canadian goverment subsidising broadband? Those Great White North prices are crazy low.