European Broadband Speeds Up 20%, Prices Down 8% between December 2009 and June 2010

Following 18 months of relative stability during the recession, competition is once again driving a reduction in prices in the European fixed broadband market, Analysys Mason says. The average price paid for a fixed broadband service bundle (that is, a single-, double- or triple-play package) has declined by about five Euros between the fourth quarter of 2009 and the second quarter of 2010 to 40.7 EUR per month.

At the same time, access speeds continue to increase. Almost 20 percent of the tariffs tracked during the second quarter of 2010 offered downstream bandwidths of 30 Mbps or greater (although the proportion of subscribers that actually take these ultra-fast services is likely to be much lower than 20 percent).

There are several obvious implications. As we have come to expect, speeds keep increasing, while prices per megabit per second continue to fall. Given discussions about increasing U.S. broadband speeds, it is worth noting that where 30 Mbps service is available, at prices lower than we see in the United States, fewer than 20 percent of consumers choose to buy such services.

Also, mobile substitution is starting to become a bigger issue. That likely will have a "depressing" impact on typical or average speeds, even if consumers have their own rational reasons for choosing lower-speed services.

As a result, the average price per megabit per second has declined from 7.5 EUR in the fourth quarter of 2009 to just 5.8 EUR in the second quarter of 2010 (see Figure 1). Some service providers, such as Romtelecom in Romania, offer services at a rate as low as 0.1 EUR per megabit per second.

Service providers continue to charge a 24 percent premium for bundles that include a broadband service with a downstream speed of 30Mbit/s or greater. This ultra-fast broadband premium has remained steady over the first half of 2010, despite an overall decline in the price of fixed broadband bundles in Europe.

Competition from mobile broadband services also contributed to the downward pressure on fixed broadband tariffs during the first half of 2010.

However, the premium that providers charge for mobile broadband services is also eroding. Prepaid mobile broadband services with usage caps of 3 GBytes or more now undercut entry-level fixed broadband service propositions in most Western European countries.

Some broadband markets in Central and Eastern Europe, such as those of Poland and Estonia, are also approaching pricing parity for fixed and mobile broadband services.

The median speed of a DSL service in Europe has reached 8 Mbps for the first time, compared with 15 Mbps for cable modem and 50 Mbps for residential fiber-to-the-basement services.

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Google to improve YouTube mobile site for mobile marketing

Google is improving its YouTube service on mobile devices, which could provide a boost to brands planning a viral video campaign.

The site will be built on HTML5 standard and can be accessed via the phone's web browser, which will provide viewers with better quality videos to watch.

Mobile users of YouTube will also be given enhanced social networking features which will make it easier to share video links on Twitter, Facebook and Google Buzz.

DMA: Google to improve YouTube mobile site for mobile marketing

Apple in talks on 99-cent TV show rentals

Apple Inc. is reportedly renewing efforts to get TV networks to offer their shows on iTunes for as little as 99 cents per show.

The report from Bloomberg, based on unnamed sources, comes as Apple is widely expected to be ready to announce a new product called iTV next month.

Apple in talks on 99-cent TV show rentals

66% of U.S. Broadband Customers Buy Services Running Between 3 Mbps to 25 Mbps

Many have focused on those portions of a recent Federal Communications Commission report on the state of U.S. broadband that suggest 14 million to 24 million Americans cannot get broadband access at speeds of 4 Mbps or higher.

 read the report here..

But the FCC also released another report with some perhaps-surprising color on broadband access.

read the report here

One interesting factoid is that 66 percent of U.S. consumers already are buying access services running at bandwidths between 3 Mbps and 25 Mbps, with 31 percent using services running between 6 Mbps and 10 Mbps.

Click on the image for a larger view.

About 16 percent already buy services running between 10 Mbps and 25 Mbps. About nine percent buy services running at rates between 3 Mbps and 6 Mbps.

Keep in mind that the study also includes mobile broadband connections that are highly valuable, but run slower than fixed connections. Those connections already represent 25 percent of total connections. Since most of those connections run at less than 4 Mbps, they represent connections that are below the FCC's threshold for "broadband."

Actual users might agree that higher speeds are desirable, but few likely would agree their connections are not highly useful, despite the lower bandwidths. Value is partly based on "speed," but also is based on other important attributes, such as whether the connection is tethered or fully mobile.

Mobile services tend to cost more than fixed services, on a capacity-per-dollar basis, but that in itself would not explain the growing popularity and use of mobile broadband.

Despite arguments by many observers that U.S. fixed-line broadband access services are not competitive, it is a curiously "uncompetitive" market where speeds double every four years, for more than a decade, growing 20 percent a year over the last 13 or so years. 

Prices are a harder thing to measure, given the changes in the basic product over time. In other words, what a consumer pays today for a broadband connection is not an "apples to apples" comparison, given the doubling of speed every four years. The "product" a consumer can buy today, for any nominal price, is a different product than was purchased four, eight or 12 years ago. 

Nevertheless, the American Consumer Institute notes that, between 2004 and 20009 alone, Internet access pricing declined 23 percent. 

Another academic study suggests cable modem prices grew 0.8 percent, while digital subscriber line prices grew five percent, between 2004 and 2009. At the same time, cable modem speeds increased 85 percent while DSL speeds increased 80 percent, that same study found.

On a cents-per-bit basis, cable modem prices declined 45 percent, while DSL cost dropped 42 percent. Over that same period of time, the consumer price index grew 14 percent. 

Fuel prices increased 26 percent, food increased 15 percent, housing increased 13 percent, medical care prices increased 21 percent and education increased 32 percent. 

It is a strange "uncompetitive" market indeed that has doubled "quality" (speeds) every four years while prices overall have declined 23 percent. 

Some observers have suggested that the Google-Verizon agreement on how to handle network neutrality is a concession by Verizon that fixed-line broadband actually is "uncompetitive," or at least not as competitive as wireless broadband is. Some observers might argue that Verizon has conceded nothing of the kind.

The FCC study, one might argue, suggests that despite the apparent lack of competition in the fixed-line broadband market, the data suggest consumers are indeed reaping the benefits of competition.

Shorter, Fewer Calls Shows Shift of Communications

According to Nielsen, the average number of mobile phone calls we make is dropping every year, after hitting a peak in 2007.

And our calls are getting shorter: In 2005 they averaged three minutes in length; now they’re almost half that.

We’re moving, in other words, toward a fascinating cultural transition: the death of the telephone call, says Wired magazine.

This shift is particularly stark among the young. Some college students I know go days without talking into their smartphones at all. I was recently hanging out with a twentysomething entrepreneur who fumbled around for 30 seconds trying to find the option that actually let him dial someone.

This generation doesn’t make phone calls, because everyone is in constant, lightweight contact in so many other ways: texting, chatting, and social-network messaging.

Clive Thompson on the Death of the Phone Call

Is U.S. Broadband Really "Deplorable"?

Some observers, apparently without reading the actual detail of a recent Federal Communications Commission report on the state of U.S. broadband access, have deplored the woeful state of broadband in the United States.

But they miss the many nuggets buried in the report, or the subtlety and complexity of assessing where broadband now stands.

Some readers will miss a major definitional change made in the report, which redefines broadband as a downstream speed of 4 Mbps or more.
Click on the image for a larger view.

There is in one sense no particular reason to quarrel with any particular set of figures for the broadband threshold. Some figure of merit has to be used. But the FCC rather significantly redefined the standard from the old "200 kbps" figure of merit to 4 Mbps. That has the effect of dramatically expanding the ranks of users who today do not have broadband today, but did yesterday.

That makes comparisons over time more difficult. But the FCC has made other changes as well, such as including mobile broadband in the survey.

The chart shows how this affects the results. For starters, lower-speed mobile connections have value that goes beyond mere downlink speed, namely mobility. In other words, mobile broadband is valuable, even when it offers less downstream bandwidth, because it is mobile and can be used mostly anywhere the mobile network will work.

The same sort of issue exists with mobile voice, compared to fixed voice. Mobile voice might be more expensive, on a per-call or some other metric, but most users would agree that it also offers more value. It is untethered, and also supports texting, music playing, email and Web access, for example, plus personalization.

The data might indicate there are lots of 3 Mbps or slower connections, but a great percentage of them are wireless broadband connections whose "value" is not captured if one only looks at download speeds or bandwidth.

More bandwidth is better, and bandwidth tends to double about every four years in the U.S. fixed broadband access market. But fixation on bandwidth alone does not make sense when wireless services are included in the same index as fixed broadband. That is akin to comparing the value of mobile voice and fixed voice looking simply at prices per call, price per month or subjective measures.

Nook Drives 21% Increase in Revenue for Barnes & Noble

Barnes & Noble has reported a loss of $62.5 million for its first fiscal quarter ending July 31, compared to a profit of $12.3 million the year before, and despite a 21 percent increase in year-over-year revenue to $1.4 billion.

Sales at Barnes & Noble retail locations continued to decline (by 0.9 percent), while online sales jumped 42 percent to $145 million year-over-year, exceeding the company’s own expectations.

The company cited sales of its e-reading device, the Nook, as the driving force behind the increase in online revenue.

Nook Drives 21% Increase in Revenue for Barnes & Noble