Saturday, February 8, 2014

Internet Access Prices are Dropping, in "Real" Terms

Historically, as most observers will readily agree, Internet access prices per bit have dropped.

But many would argue that absolute prices have not dropped.

In many cases, consumers have paid about the same amount of money on a recurring basis but have gotten better performance, in terms of access speed, many would argue.

It is a nuanced issue. In some cases, absolute prices might have climbed, on average.

So how can one claim that prices have declined, as some note. Prices declined 82 percent, globally, between 2007 and 2012, according to the International Telecommunications Union, measured as a percentage of income.

That's the key: "as a percentage of income." In some cases, higher absolute prices might represent a lower percentage of household income. So, in "real" terms, prices dropped.

That trend is clear enough, globally, for Long Term Evolution prices, which have dropped in about 73 percent of markets. There also is evidence that U.S. Internet access prices also dropped between 2004 and 2009, for example.

A 2011 study by the International Telecommunications Union, for example, shows consumers and businesses globally are paying on average 18 percent less for entry-level services than they did in 2009, and more than 50 percent  less for high-speed Internet connections, the ITU found.

Relative prices for mobile cellular services decreased by almost 22 percent from 2008 to 2010, while fixed telephony costs declined by an average of seven percent.  

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