Broadband News

The grass is not always green on the other side...

  • Wednesday, December 11, 2002 12:19 PM

The US, which is touted by many pundits as the model of broadband penetration and take-up is not quite the golden egg some would have us believe. has run a news item on the problems with dark fibre in Portland, Oregon. Apparently there is 140,000 miles of fibre laid along one interstate but 95% of this is unlit and it will cost tens of billions of dollars to light the fibre. The dotcom fallout has sent 14 of the 33 companies that installed the fibre into bankruptcy. The fibre was laid speculatively when the dotcom boom was racing away, and now lays dormant with no immediate chance of it being utilised.

In other news from across the water is reporting that US cable users have seen cable rates increase 45% in the last 6 years. San Francisco users are facing a $14 rise to $60 (£41) a month for high speed Internet access. Apparently the cable companies are blaming the price rises on the cost of sports programming and network improvements.

Reading the US broadband news it becomes apparent that most people have very little choice of providers, only around 5% of cable users have a choice of cable companies. This means unless users can find a DSL package which tends to cost slightly more than the cable packages they are stuck with the single provider. Interestingly the DirecTV satellite service gets pushed as much as the fledgling UK satellite services, and they are seeing growth as people leave the cable providers.

Why does this concern us in the UK? Well very often our pricing tracks the US, currently cable and DSL pricing is still falling in the UK, but this may reverse and with companies trying to increase the revenue per customer price the time when it happens does not seem far off. One thing that service providers are well aware of is that the majority of people once they have broadband they do not want to part with it. This is one of the reasons why many ISPs in the US used to run special introductory offers and a number of UK ISPs are trying similar tactics, aiming to build a significant customer base quickly.

If the price rises are down to costs of content provision as is suggested, it means that if we do want content that is worthy of broadband we may end up paying for it. Ideally it should be only those who want to view the content that pay and not all users on a service.


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