more on more on U.S. broadband A-OK MUST READ

[David Farber <dave () farber net>]

------ Forwarded Message
From: <david.e.young () verizon com>
Date: Tue, 11 Jan 2005 13:46:23 -0500
To: <dave () farber net>
Subject: Re: [IP] more on more on U.S. broadband A-OK


The $/month/mbps is interesting in the way that $/transistor/CPU is
interesting (Yes, Moore's Law leads to dramatically cheap prices per
transistor that are fun to look at or put on a chart).  But that type of
number's value to consumers is questionable.  For example, using Jock's
logic, consumer's in the US would be better off than those in Germany if
they were only paying 2.5 cents /mo per Mbps (10gig for $250).  This may be
true, but not very useful since it is unlikely that many consumers would
actually buy the service for $250/month even though it would be the best
deal out there. 

An important point that Declan's article missed is that in the US, low-cost
dial-up internet access is widely available and used.  Flat rate local
calling allowed dial-up internet usage to explode in the US through the late
90s.  Many of these other countries had (and continue to have) usage-based
pricing for ALL phone calls - including dial-up internet calls - which
dramatically limited the adoption of dial-up.  When reasonably priced
broadband came along, consumers who were hungry for ANY internet access
quickly adopted it.

Consumers here are very often leaving lower priced dial-up connections to
get the benefits that come with higher speeds.  But there are limits.  I
don't think many DSL customers paying $35/month or Cable Modem customers
paying $45/month would be willing to jump to $125/month for broadband
regardless of speed or $/month/Mbps implied.  Would American's be adopting
broadband faster if they didn't have free local calling.  Absolutely!  But
would they be better off?  Looked at in that context, broadband usage in the
US is growing pretty nicely.

Metrics are interesting and useful, but focusing purely on speed and/or
$/mo/bandwidth could be very misleading. As Declan's article did state,
there are other factors involved that affect uptake.  In the US, the wide
use of dial-up as a substitute for broadband is clearly a major factor.
Tens of millions of perfectly rational dial-up customers are still willing
to pay $15-$25 per month for 56k Internet access even though it equates to a
whopping $268 to $440/month for each Mbps.  Total 'out of pocket' cost per
month seems to be a more significant factor for most consumers than some
metric that takes into account speed.

-David 

--------------------------------
David E. Young
Director, Internet & Technology Policy
Verizon Communications
1300 I Street NW
Washington, DC 20005
+1 202-515-2425  <Office>
+1 202-365-4755  <Mobile>
+1 202-336-7923  <Fax>
david.e.young () verizon com 

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