Of “Cartels” and Price Wars

by on September 2, 2008 · 10 comments

So, if Tim Wu’s thesis is correct that the broadband marketplace is “a cartel,” should we be reading headlines in today’s Wall Street Journal and CNET News.com like this: “Price War Erupts For High-Speed Internet Service” and “Broadband Price War Brews“? From the WSJ story:

The battle between cable and phone companies to sign up new customers for high-speed Internet service is heating up, creating fresh opportunities for consumers to cut their bills. [...] While the most generous offers are coming from the phone companies, some analysts expect cable companies will also become more aggressive in their own promotions as they compete to retain customers.

Geez, if that’s a cartel, give me more of them!

  • http://bennett.com/blog Richard Bennett

    Once we get widespread introduction of overage pricing for heavy downloaders, we may just see price increases and decreases at the same time, depending on your usage pattern. See my article in El Reg today on price increases thanks to the FCC: http://www.theregister.co.uk/2008/09/02/bennett

  • Ryan Radia

    According to Pew, the average US residential broadband bill has been decreasing slightly each year (8 percent total decline in the past 4 years) but the average price per megabit is declining much more quickly. New broadband tiers like Qwest Titanium, AT&T U-Verse, Comcast Blast!, and of course FiOS are all offering service with 10 to 50mbps downstream and 1-5mbps upstream at the same $50 price point that could only get you 3.0/768 a couple years ago.

    Also, here's Karl Bode's rebuttal to the WSJ article:
    http://www.dslreports.com/shownews/There-Is-No-

  • http://thevitaminkid.blogspot.com autodidact

    Experience in my area is more consistent with Karl Bode's rebuttal. The only way to get a deal is bundling phone/broadband/television with fine print and time limits. I'm beginning to think you couldn't pay me to subscribe to cable/satellite TV of any sort. Therefore, no bundles will appeal to me. I currently have a Qwest 1.5Mbps connection at a “guaranteed price for life” of $32. As long as they're in business, I'm in business, with modest speed. Will cable try to compete with that? Doubtful, unless I bundle.

  • Ryan Radia

    I suspect the main reason for the lack of good deals on unbundled service is the lack of demand for standalone broadband. Consumers seem to be buying into double and triple play offerings, and providers love it because it translates into higher profits.

    In a couple years, once LTE and/or Wi-Max start to take off, there's a good chance you'll see more competition for reasonably-priced fixed wireless broadband. But you will always get better deals with bundles than without.

  • Snurd Honson

    Please try to maintain control of your bowels:

    http://techdirt.com/articles/20080902/125144215

  • http://thevitaminkid.blogspot.com autodidact

    Experience in my area is more consistent with Karl Bode's rebuttal. The only way to get a deal is bundling phone/broadband/television with fine print and time limits. I'm beginning to think you couldn't pay me to subscribe to cable/satellite TV of any sort. Therefore, no bundles will appeal to me. I currently have a Qwest 1.5Mbps connection at a “guaranteed price for life” of $32. As long as they're in business, I'm in business, with modest speed. Will cable try to compete with that? Doubtful, unless I bundle.

  • Ryan Radia

    I suspect the main reason for the lack of good deals on unbundled service is the lack of demand for standalone broadband. Consumers seem to be buying into double and triple play offerings, and providers love it because it translates into higher profits.

    In a couple years, once LTE and/or Wi-Max start to take off, there's a good chance you'll see more competition for reasonably-priced fixed wireless broadband. But you will always get better deals with bundles than without.

  • Snurd Honson

    Please try to maintain control of your bowels:

    http://techdirt.com/articles/20080902/125144215

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