Mind the Spin

by on May 10, 2006 · 10 comments

Art Brodsky of Public Knowledge blogs about the fantastic success of the British telecom market:

The advertisement on the wall in the subway station was hard to believe–a broadband service with 24 meg download for about $45 per month. That was the good news. Unfortunately, the service isn’t available in the U.S. The ad was on the wall of tube stop in London and the company, Be, http://www.bethere.co.uk is British. Just to rub it in a little, it gets better. There is also a cheaper option, about $25 per month, which still gets you the 24 mbps download, but with a slower upload speed. This in a city in which a bottle of water will set you back about $2.25.

Now, let’s contrast that combination of price and service with an ad in today’s Washington Post, in which Verizon will sell you the blinding speed of 768 kbps for $17.99 per month with a yearly contract.

And for one more bit of shopping–Verizon’s FIOS service, their fiber optic super-speedy, up to 30 mbps version. What will that cost you? According to the Verizon web site, up to 30 mbps can be had for between $180 per month and $200 per month.

Sounds pretty terrible! In the United States, you have to pay about 4 times as much for slightly more bandwidth, or you can pay slightly less for 1/30 the bandwidth. However, with a little bit of research it becomes apparent that Brodsky might be cherry-picking his examples just a little bit.

Let’s start with the high end. For $45–exactly the same price as Be’s unlimited plan–you can get FiOS from Verizon at a speed of 15 megs down and 2 megs up. That’s clearly slower downstream, although not incredibly slow, and slightly faster on the upload speed.

As for the low end, in my area Charter’s offering you a 3 Mbit service for $19.99 for the first six months, after which it goes up to $29.99. 24 is obviously a lot more than 3! At least, until you read the fine print: Brodsky doesn’t mention that the low-end $25 Be plan has a 1 GB download cap. That means that if you download at full speed, you get to saturate your 24 mbit connection for a whopping 5 and a half minutes every month. If you shell out another $5/month, you can get another 5 GB, which means you can download at full speed for half an hour every month. Clearly, this plan is not designed for people who would make much use of the full 24 mbit link.

I’d like to learn more about the British model. It does sound like they have more compeition which is intrigueing. But in any event, if you do an apples-to-apples comparison, it doesn’t look to me like the British are very far ahead of us in price/performance.

  • John Middleton

    Its all about the local loop unbundling, a lot of providers are jumping on the bandwagon. Unfortunately, as you point out, they offer these ‘super’ hi-speed services but then massively cap them because the only thing people really use 24mb/s is porn+file sharing! The LLU operators are having a real hard time making any cash off their investments – if you want to learn more then I’d recommend Ofcom’s Strategic Review of Telecoms and the legal undertakings agreed with BT to (theoretically) implement equality of access.

  • http://www.commonsmusic.com/blog Commons Music

    I’ve been trying to find more data on broadband in Japan, which seems to be farther ahead than most anywhere in the world, with reports of 100Mbit download speeds. There have been some scattered reports (this one, most notably), but nothing concrete that I can read.

    Although, I did find a direct Japan-to-UK comparison on broadband: BBC

  • John Middleton

    Its all about the local loop unbundling, a lot of providers are jumping on the bandwagon. Unfortunately, as you point out, they offer these ‘super’ hi-speed services but then massively cap them because the only thing people really use 24mb/s is porn+file sharing! The LLU operators are having a real hard time making any cash off their investments – if you want to learn more then I’d recommend Ofcom’s Strategic Review of Telecoms and the legal undertakings agreed with BT to (theoretically) implement equality of access.

  • http://www.commonsmusic.com/blog Commons Music

    I’ve been trying to find more data on broadband in Japan, which seems to be farther ahead than most anywhere in the world, with reports of 100Mbit download speeds. There have been some scattered reports (this one, most notably), but nothing concrete that I can read.

    Although, I did find a direct Japan-to-UK comparison on broadband: BBC

  • SoCal Jim

    I think competition is exactly the issue–through commercial competition, services and technology here in the States could quickly rival our neighbors. While the prices are still pretty outrageous, I think time and development (and hopefully, the government and telecomms relax their current stumping) could bring about astounding change in the next year or two…

  • birdofprey

    Jim is exactly right. We’d do well to foster competition–it’s the road to innovation, better services and better prices.

  • SoCal Jim

    I think competition is exactly the issue–through commercial competition, services and technology here in the States could quickly rival our neighbors. While the prices are still pretty outrageous, I think time and development (and hopefully, the government and telecomms relax their current stumping) could bring about astounding change in the next year or two…

  • birdofprey

    Jim is exactly right. We’d do well to foster competition–it’s the road to innovation, better services and better prices.

  • Stevens33

    The real problem in the US is cable franchise laws. They support monopolies (for what reason I do not know) to the detriment of the consumer both in cost and in quality. If these were reformed, chances are pretty good that Verizon’s FIOS service (which is amazing) would be much cheaper.

  • Stevens33

    The real problem in the US is cable franchise laws. They support monopolies (for what reason I do not know) to the detriment of the consumer both in cost and in quality. If these were reformed, chances are pretty good that Verizon’s FIOS service (which is amazing) would be much cheaper.

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