Cable broadband prices rising

Point Topic: The average price of cable modem services rose in the last quarter of 2005 . This goes against the dominant trend in broadband prices worldwide over the past few years. It shows that cable operators have been able to take advantage of the lack of price competition from DSL in some countries.

Point Topic’s Benchmarks have been tracking broadband price levels since March 2000. They bring together the prices charged by 18 DSL operators and 16 cable networks across the Americas, EMEA and Asia-Pacific regions. In the last quarter of 2005, the average monthly rental for entry-level DSL services provided by these operators fell by 1.2% to US$28.74. (Figure 1). The comparable figure for the cable operators rose by 3.2% to US$32.57. By this measure, monthly cable broadband rentals are now 13% higher than DSL charges.

Figure 1 Average broadband tariffs (in USD)

Source: Point Topic

In fact most of the operators kept their prices steady in the quarter although some increased the bandwidth provided while leaving the rental unchanged. The only price cut was by Chunghwa, the incumbent operator in Taiwan, which reduced the cost of its 256kbps ADSL 1 service to only US$6.03 per month. Four out of the 18 DSL operators surveyed have now cut their entry level prices in the last 12 months. The other three are Telekom Austria, Telecom Italia and TDC in Denmark.

On the cable side, Kabel Deutschland, in Germany, brought about a big increase in entry-level prices by discontinuing its low-cost 'Flat Silver' service. Two Canadian operators, Rogers and Shaw, put through more modest price increases. Looking over the past 12 months the overall average of cable modem rentals is still down, as Figure 1 shows, but Shaw, Rogers, and ONO in Spain are all charging more than they were a year ago.

Germany, Spain and Canada are all countries with relatively high DSL prices so cable operators can take advantage of this to maximise their revenues. Another tactic is to offer cable broadband only as part of a bundle with TV channels. This allows the cable company to hold on to market share even with a high entry-level threshold and helps to account for the overall higher average level of cable prices in the benchmark. Broadband Tariff Benchmarks Publ 20060116