All around the world the price of residential bandwidth is falling. As communications and entertainment services begin to merge on a single digital platform, bundled packages of mobile and fixed voice, digital TV and Internet access are becoming commonplace. But the similarities end there.
"eMarketer estimates that the average cost of 1Mbps of residential bandwidth in North America is about six times that paid in Japan or South Korea and four times as expensive as in France," says Ben Macklin, eMarketer Senior Analyst and author of the new report, Broadband Prices & Bundles: International Trends
. "Likewise, the average cost of a triple-play (fixed-phone, broadband and digital TV) offering in the US in June 2006 was about $100 per month, compared with an equivalent package in Japan, South Korea or France at less than half that cost."
eMarketer examined the broadband offers of 35 access providers in 11 countries during February/March 2005 and May/June 2006. The data shows that residential bandwidth is increasing across the globe providing operators with the opportunity to expand their services to include voice and video, in addition to Internet. But, at the same time, competitive pressures are forcing residential broadband costs down, and in some markets it is being given away for "free" with other bundled products.
"In the Asia-Pacific region, countries such as Japan and South Korea, where fiber-to-the-home (FTTH) is widespread, lead the world in bandwidth per dollar. 1Mbps of bandwidth costs less than $1 with consumers able to purchase a 100Mbps connection for under the equivalent of $US45 per month," says Mr. Macklin. "Triple-play services are available for under $60 per month."
He continues, "In Europe, France leads the way with 1Mbps of residential bandwidth costing approximately $1.51 in June 2006, followed by Italy ($2.34) and the UK ($2.86). France already boasts approximately 300,000 IPTV (Internet Protocol TV) subscribers and VoIP (voice-over Internet Protocol) is being rapidly adopted across the continent."
In North America, residential bandwidth prices fell over the last 14 months but not nearly as quickly as in the other surveyed markets. Cable operators ramped up their bandwidth and have begun to make significant inroads into the voice market while telecom operators slash their ADSL prices to try and compete.
"The prize US operators are after is the $300 billion voice, video and data market that is currently in a state of flux," says Mr. Macklin. "As stand-alone products, fixed-voice, broadband and digital TV are perhaps worth $50 per user, per month, $40, and $45 respectively, but eMarketer’s analysis reveals that a triple-play bundle is available, on average, for $90 – $110 per month in June 2006, 25%-35% below the stand-alone value."
"Why bundle?" asks Mr. Macklin. "For the operator it has the potential to reduce churn and improve economies of scale. For the consumer it can enable the consolidation of bills to just one and bundled products are likely to be cheaper than purchasing each product individually."