Broadbandonomics and Competitive Advantage

Interesting article from Point Research on the pricing of different Broadband options (seen in Ars Tech):

Around the globe, DSL remains far more expensive for the speed you get, but it has also shown the greatest drop in price. Between the first and third quarters of 2008, DSL dropped from $25 per megabit to $18 per megabit.

Cable prices haven't fallen nearly as much, but cable service remains a far better value on average. While DSL still costs about $1 8per megabit, cable is only $6-7 per megabit. Some of this excellent performance is driven by smaller European operators, which offer both lower prices and faster speeds than they used to. In the US, however, the report notes that "speeds have gone up but the price hasn't changed."

Fiber remains the best value—if you can get it—but it's also the most expensive option. Average cost per megabit is a mere dollar or two, but the average bill is $65. Countries like South Korea and Japan are largely driving the worldwide growth of fiber to the home, though companies like Verizon offer it in parts of the US as well.

This is all very interesting - as they point out, the reason DSL is so high on aggregate si that it is the only available system in many developing countries, but is highly priced:

Middle Eastern and African countries, for instance, are paying a whopping price for DSL service: $46 per megabit. In Western Europe, the cost is about $6 per megabit. Because phone lines are much more widely installed around the globe than are cable systems, DSL is one of the few viable delivery systems for Internet access in many countries, even when expensive, and is one reasons for DSL's high worldwide price.

Now the other side of this coin - Fibre is very cheap, but is very hard to get - and tends to mainly occur in countries where the government has stepped in to drive the market (Japan, Korea). We believe that intervening like this to drive the price down will confer massive digital logistics advantages to those countries, so it is with some concern we note the OfCom believes broadband buildout in the UK should be a private sector affair.