Costs for delivering broadband Internet go down; prices go up

Just want to highlight a study from a few weeks back, since this issue comes up to often.

As you already know, the study concludes,  phone and cable carriers continue to raise your rates on Internet access.  Phone and cable companies also complain that you use the Internet too much so they have to block, slow down, or charge you even more for the online software you love.  But, it turns out, as is the case in high-tech industries, their costs are going down.  Technology gets better, so producer costs go down, and so consumer prices should go down with them.  In fact, abroad, broadband prices went down around the world by 37%, according to the study, while increasing here.  What’s the matter with US?

It’s not technology but policy and market structure.  The study shows that areas with more competitors benefit from lower prices–competitors have to charge less, rather than soak up fat profits.  As their own costs fall, the carriers have to pass those savings onto consumers or be killed in the market.  In the US, thanks to FCC “deregulation” under the Bush administration, we have little competition, high prices, and threats to network neutrality, rather than high-speed, open, competitive offerings.  The magic of the unfettered, concentrated market.

One thought on “Costs for delivering broadband Internet go down; prices go up

  1. […] July 6, 2009 · Leave a Comment Chris Anderson’s book has gotten a lot of negative attention. But at least his point that bandwidth costs are decreasing is backed up by facts. […]

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