Standalone tariffs (broadband service only) are the basis for this analysis. It is increasingly common for operators to offer bundles of services, broadband plus telephone service plus TV and sometimes mobile as well. Comparison of speeds and prices for the bundles is almost impossible however given the variations in content between the offerings.
Regional variations on technology, prices and speeds
There are wide variations on subscription price and speed across regions and technologies. To aid comparison Point Topic has calculated the average amount a consumer will pay for a megabit(Mb) of bandwidth.
While DSL prices have seen the largest average falls in 2008 it is still the most expensive broadband option for the bandwidth on offer.
In the Middle East & Africa for example consumers are paying over $46/Mb which when compared to Western Europe at $6.23/Mb reveals the wide variation in the markets.
However this is still a major improvement in the year for consumers, prices in the MEA region have dropped by 7% on average in the year and speeds are up 13%. DSL broadband has a large number of operators competing for consumers and the pressure on pricing and speed is intense particularly when you factor in the increasing availability of other broadband technologies.
North America & Canada however as a mature DSL market where competitive pressure has been strong for a while shows only a small fall in average price and correspondingly minor increase in speed since Q108.
Average DSL speeds on offer have been higher in Asia Pacific than North America since implementation but the gap has been closing. Even now though the average price per megabit is $16.10 in North America compared to $3.80 in Asia Pac.
Implementation of DOCSIS 3.0 has gathered pace during 2008 in North America and Western Europe enabling cable operators to offer significantly higher speeds and the price per megabit on offer has improved.
In Q108 cable broadband was more expensive per megabit in Western Europe than North America, $7.45/Mb and $5.80/Mb respectively. Now though operators in Europe are offering higher speeds and lower average prices for their packages, while in America the speeds have gone up but the price hasn’t changed meaning the comparison now stands at $4.80/Mb and $4.89/Mb respectively.
Other regions have been less volatile with very small changes in speed but there was still some downward movement in average prices with Eastern Europe showing an average reduction of 25% on prices for cable packages in the first three quarters of the year.
Fiber broadband has started to make significant progress in 2008. As has been previously noted consumers are happy to move to fiber where it is offered.
Where it is available fiber packages are priced very competitively with the other broadband technologies and given the higher speeds possible there is good reason for the transfer of consumers in 2008 as in South Korea and Japan.
The price per megabit is a telling factor.
Figure 2: Average price per megabit of bandwidth (US$) – averages of regional/country totals
NB: Fiber prices and speeds based on averages of available country implementations, DSL and cable taken from a wider base of regional averages
Taking worldwide averages of the price per megabit fiber is 4 times cheaper than cable and 10 times cheaper than DSL in Q308.
Given the strong position it occupies there has been little reason for the fiber operators to change their speed or pricing levels. Operators have the option to increase prices and decrease speeds and still offer a better deal for consumers and there is evidence that this has been happening in some markets.
This analysis is taken from the reports, Broadband Tariff Benchmarks - Report for Q3 2008 and Broadband Tariff Benchmarks - Report for Q1 2008 available to subscribers to the Operator Source service.