DSL Prices Stabilize in 2003
The average price reduction during the fourth quarter was 2 percent, with only six of the 18 operators surveyed cutting their charges. And the high cost of providing DSL services means this trend is likely to continue in 2004, reckons Tim Johnson, founder and publisher of Point Topic.
"On the whole, operators will keep prices the same," predicts Johnson. "They can’t really afford to cut them any more," but they may need to increase their access speeds to remain competitive, he notes.
Prices may even go up. Deutsche Telekom AG (NYSE: DT), for example, was forced to increase its tariffs after the German regulator Regulierungsbehörde für Telekommunikation und Post (RegTP) upheld competitors’ complaints that it was engaging in below-cost pricing. This price hike can be seen in the chart below.
The chart shows an overall trend of rising prices in 2001, a leveling off in 2002, and then a sharp dip in mid-2003 before stabilizing once more.
Johnson believes market conditions will get tougher for operators as competition increases and uptake slows down. "DSL is a more mature market than many people realize," he says. "Even in the U.K. more than 20 percent of Internet users already have broadband."
This maturity will lead to a broader range of services, with operators offering low-cost, low-speed access to tempt customers that want to upgrade from dialup but who can't afford, or don't need, regular broadband. Spain's Telefònica SA offers such a service, but it is not classified as broadband by Point Topic.
The DSL tariff report follows Point Topic's cable broadband benchmarking results, which showed that cable prices have also remained stable (see Cable Broadband Prices Steady).
— Nicole Willing, Reporter, Light Reading