Prices drop dramatically as broadband comes of age

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Consumers and businesses globally are paying on average 18% less for entry level information and communication technology (ICT) services than they were two years ago – and more than 50% less for high-speed Internet connections according to figures released by International Telecommunication Union (ITU).

Those countries with the cheapest broadband prices in real terms are all high income economies. An earlier report by Analysys Mason shows that the average price of ultra-fast broadband (defined as 30Mbps downstream or faster) dropped below €50 for the first time in the final quarter of last year. It seems ICT has now matured in Europe and the US to a stage where better performance at cheaper prices is a given.

The price premium for high speed broadband is also shrinking. Services of 30Mbps and faster were just 18% more expensive than the median price of all fixed broadband services across Europe and the US in the fourth quarter of 2010.

According to Analysys Mason, two factors have driven this decline. The first is the commoditisation of higher speed broadband in countries where the service has been available for a number of years and where second and third operators are also offering high speeds. The second is technological advancement: for operators, the cost per home passed has declined as next generation technology and government policy have matured, enabling new entrants to offer ultra fast broadband at lower initial prices than would have been the case even two years ago.

Data from ITU’s 2010 ICT price basket (an amalgam of fixed telephony, mobile telephony and fixed broadband services) also show that relative prices for mobile services decreased by almost 22% from 2008 to 2010, while fixed telephony costs declined by an average of 7%. Over the same period, the number of mobile subscriptions worldwide grew from 4 billion to 5.3 billion.

“With ICT now a primary driver of social and economic development, these results are highly encouraging,” said ITU secretary-general Dr Hamadoun Toure. “Our next challenge is to find strategies to replicate the ‘mobile miracle’ for broadband, which is fast becoming basic infrastructure. Countries without affordable broadband access risk falling quickly behind.”

This year’s price figures underline the fact that cost remains a major factor in perpetuating the ‘digital divide’ between rich and poor countries. They reveal a close link between the affordability of ICT services and national income levels with people in high income countries paying relatively little for telephony and broadband, while those in the world’s poorest countries pay a higher amount as a percentage of income.

Thanks,

Anthony Plewes

Photo: Clan UiBriain/FlickR

Anthony Plewes

After a Masters in Computer Science, I decided that I preferred writing about IT rather than programming. My 20-year writing career has taken me to Hong Kong and London where I've edited and written for IT, business and electronics publications. In 2002 I co-founded Futurity Media with Stewart Baines where I continue to write about a range of topics such as unified communications, cloud computing and enterprise applications.