There's No Broadband 'Price War'

From Broadband Reports:

Again, There's No Broadband 'Price War'
Non-price competition is the benefit of monopoly/duopoly power...

About twice a year, in reaction to even the least exciting price promotions, the media proclaims en masse that there's a "broadband price war." When you look closer, that's never the case -- and in some cases customers are actually paying more. The nation's cable and phone companies operate as monopolies and duopolies, intentionally engaging in non-price competition. Occasionally carriers do offer introductory discounts, or promise savings should you bundle services. But more often than not these efforts are designed to give the illusion of value -- not actual value, and once you crunch the numbers and add all fees, your savings are negligible.

Techdirt directs our attention to a Technology Liberation Front report that claims that price drops are occurring, it's just that you aren't looking at it correctly. According to the piece, costs are falling on the price per megabit level. Citing the new DOCSIS 3.0 tiers we exclusively reported Monday, the website notes that customers are paying the same amount for faster speeds, which could be construed as price savings:

Though we may not be amidst a "price war" among ISPs per se, as Mike Masnick recently argued, there is simply no denying that price per megabit is declining rapidly. This is all thanks to competition, of course, which has pushed providers to invest in newer technologies that allow for faster broadband connectivity.

Of course many customers in less competitive markets often don't see upgrades, and not all carriers are being as aggressive as Comcast or Verizon about DOCSIS 3.0 or fiber upgrades. The piece also doesn't mention a few other markets realities, such as the fact that many carriers quietly raise prices via below the line fees so they can keep the advertised rate the same. Customers have also seen a rise in things like early termination fees and other surcharges (pay more to pay in person for example), while those same users are actually getting less service (newsgroups) and more annoyances (DNS redirection advertisements, the sale of their browsing histories).

And don't forget the growth of caps and throttling, with many carriers considering charging overage fees because the already profitable flat rate industry pricing model apparently isn't profitable enough. And did I mention the endless rate hikes for cable TV, which were supposed to end with the introduction of bell TV but didn't? If we're going to play games of relativity, it helps to look at the whole picture.

According to the latest OECD data, the United States ranks fifteenth in broadband penetration and twenty-first in price paid per megabit, a ranking that's getting worse because of a lack of competition in many areas. While Comcast's speed hikes may be nice, and there are select instances of cost savings for smart shoppers and savvy negotiators, there is no price war. It's more like a price two-step, or a price scuffle if you're feeling generous.