Saturday, December 23, 2017

Do Bananas Cost Too Much?

Even if some observers seem always to complain about how much internet access costs, that is a bit like complaining about bananas costing too much. Costs now have gotten so low (consumer or business internet access) that it is cumbersome to even bother using a metric such as cost per kilobit (kilobits per second).

We moved more than a decade ago to cost per megabit per second. Now we are moving to measuring in hundreds of megabits per second. In the future we will measure in terms of gigabits per second.

Around 1995, the cost of buying a business connection supporting a kilobit per second might have been US$1.50 to $1.75. In other words, a 56 kbps connection might have cost as much as $98 a month.

By about 2006, even consumer internet access costs had dropped to about two cents per kbps. So a 10 Mbps connection might then have cost the same as the 56 kbps connection of 1995. In 2017, U.S. 100 Mbps connections cost about the same as a 56 kbps connection of 1995.

As speed has grown and apps have evolved, consumers now use more data (megabytes), so the cost per consumed megabyte also has fallen, even as people use more data.

Source: Boston Consulting Group

While complaints about high prices never seem to stop, in developed markets as well as the United States, the percentage of disposable income spent on fixed network internet  access  is about 1.7 percent of gross national income per person.

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