Thursday, October 18, 2007
How Long Can Cable Keep Prices Up?
For years, cable companies boasted the fastest residential broadband speeds, allowing them to resist lowering their prices. But that pricing stability may be changing, according to a new analysis by market research house Pike & Fischer.
For an expanding number of homes, at&t and Qwest can match or exceed cable offerings with downstream speeds up to 7 megabits per second. And with the launch of its fiber-based FiOS service, Verizon now can exceed cable modem speeds at competitive prices in a growing number of markets.
For customers signing a contract, FiOS delivers speeds of 5 to 10 Mbps downstream and 2 Mbps upstream for $40, and 15 to 20 Mbps downstream and 2 to 5 Mbps upstream for $50, note analysts at Pike & Fischer. Verizon has also begun offering FiOS "triple-play" service bundles priced below $100. This is forcing cable operators in FiOS markets to respond.
Significant downward price pressure will be the result. Cablers soon will find out that in capacity and access markets, unlike some content businesses, the typical and expected trend is lower prices over time.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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