There has been a marked decrease in the cost of a megabit, with Brits paying on average just half the amount they were paying in early 2008 for their bandwidth, according to new research.
The findings from broadband analyst firm Point Topic shows that the ongoing reduction to the price of bandwidth tariffs is due to increased competition as operators look to move into new markets for DSL and fibre.
“DSL prices in particular are being squeezed. Competition between operators and access technologies is driving the search for more markets and DSL is well placed to capture customers who don’t need full speed 24/7 bandwidth,” said Oliver Johnson, CEO of Point Topic.
Index of entry level standalone fixed broadband – cost per megabit
He added: “Many users do not use their broadband for more than a couple of hours a day and when they do it’s often for applications that use relatively little bandwidth. They care much less about the cost per megabit, where fibre has the edge, than about the upfront and monthly charges and DSL wins that battle hands down.”
However, the next stage in broadband delivery reveals itself in some of the more advanced markets.
“Fibre to the building is a popular way of providing broadband. An increasingly common model in many markets is for a block of flats to get a fibre connection and the bandwidth is then delivered over a LAN to the individual units,” said Johnson.
This solution is dependent on the local and national infrastructure and the spread of the population. Countries like Japan, Korea and in the near future Australia where there are highly concentrated populations and end-to-end fibre is available are seeing significant technology substitution with DSL in particular being replaced by fibre.
The result is that the drop in DSL prices is not worldwide, in Asia Pacific costs have increased over the last two years.
“Subscriber behaviour is changing. The increasing popularity of high bandwidth applications, particularly video, mean that low cost per megabit carries more weight than low subscription costs. Operators are seeking ways of fulfilling existing needs and scrambling to create new ones.
“The developing broadband markets will continue to see rapid growth particularly in DSL subscriptions in 2011. However, the advent and spread of connected TV is going to be the real news in the mature markets. Enabling consumers to watch streaming video on their TV sets will drive bandwidth demand up significantly and where fibre is available we’ll see appreciable growth in its market share,” said Johnson.
Point Topic collates data on more than 3000 broadband tariffs from around the world. This analysis is based on standalone consumer charges and bandwidths.