More Broadband Progress

by on April 24, 2008 · 6 comments

Comcast recently unveiled a 50 Mbps broadband connection for $150/month, and has promised to have it available nationwide (and most likely bring the price down somewhat) by 2010. Verizon is in the process of rolling out a new fiber infrastructure that will allow it to offer a similar deal (you can also get an 8 Mbps connection for $50/month). All of this makes Qwest look like a relative laggard, with its announcement that it will soon be offering a 20 Mbit service for $100/month, and 12 Mbps for $50/month. And AT&T brings up the rear with plans for “only” 10 Mbit service.

One sometimes sees hand-wringing about the anemic state of the American broadband market. To the extent that other countries are doing even better (a debatable contention), we should certainly be looking for ways to make the broadband market more competitive. No doubt things would be progressing even faster if there were more players in the market. But the strong claim you sometimes see that there’s something deeply dysfunctional about the progress of the US broadband industry, is positively silly.

If Comcast and Verizon deliver on their promises to roll out 50 Mbit service by the end of the decade, and if prices follow their historical pattern of dropping over time, consumers in their service footprints will have seen the average speed of a $50 Internet connection increase by three orders of magnitude in about 15 years. And it’s been a reasonably steady pace of growth: in round numbers, $50 would buy you a 56kbps connection in 1998, a 512kbps connection in 2001, a 5Mbps connection in 2006, and (I hope) a 50 Mbps connection sometime early next decade. Things have consistently improved by a factor of 10 every 4-6 years.

It’s interesting to look back at the broadband argument we were having a couple of years ago. In mid-2006, TLF reader Luis Villa was reporting that he and his folks were still seeing typical broadband speeds of 2 Mpbs. Maybe he can chime in to let us know if that number has gone up at all. Personally, my apartment in St. Louis gets around 5 Mbps for about $30/month, and the house where I’m currently staying in DC has a 17 Mbps Comcast connection.

One of the things that makes it hard to judge is that broadband speeds and prices don’t tend to grow continuously and evenly around the country. Rather, carriers take turns leap-frogging one another, with each upgrade accompanied by a temporary price increase. So it can be tricky to judge the average rate of improvement by looking at just one market, because one market may seem to stagnate for several years at a time. But if one looks at the country as a whole, and focuses on time horizons closer to a decade, I think it’s undeniable that things are improving at a fairly rapid pace.

  • Ryan Radia

    Yes, things are getting better fairly quickly. In the last 10 years, using two different providers, my downstream has gone from 640kbps to 1.5mbps to 8mbps to 16mbps, and will soon go to 30 or 50mbps once Comcast rolls out DOCSIS 3.0 in north VA. All this for around $50 a month. Not bad at all for a duopoly.

    The benefits of competition are apparent when you look at where speeds are highest. Comcast only offers up to 8mbps down in most places, but in areas where FiOS competes Comcast offers 16mbps down for the same price as 8mbps in other cities. And the telcos sticking with copper last-miles are the worst of the bunch, as their only real upgrade path is VDSL, which is expensive and doesn’t work more than a mile and a half from the DSLAM.

  • Ryan Radia

    Yes, things are getting better fairly quickly. In the last 10 years, using two different providers, my downstream has gone from 640kbps to 1.5mbps to 8mbps to 16mbps, and will soon go to 30 or 50mbps once Comcast rolls out DOCSIS 3.0 in north VA. All this for around $50 a month. Not bad at all for a duopoly.

    The benefits of competition are apparent when you look at where speeds are highest. Comcast only offers up to 8mbps down in most places, but in areas where FiOS competes Comcast offers 16mbps down for the same price as 8mbps in other cities. And the telcos sticking with copper last-miles are the worst of the bunch, as their only real upgrade path is VDSL, which is expensive and doesn’t work more than a mile and a half from the DSLAM.

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