Broadband access cost, speed and bundling

I came across interesting findings in the Broadband Access Cost study done for the European Commission. The study covers all EU countries, the EEA countries and some non-European countries for the period 2007-2009.

In terms of technologies used for providing broadband in the EU the xDSL offers are declining steadily since 2007, while the cable offers have the highest increase, followed by the fibre to home (FTTx) offers.

There is a steady decrease in the offers, which provide internet access only. Increasingly providers are bundling internet with telephone and television, with more than half of all broadband Internet access packages containing multiple services. This trend to bundle offers is to be observed for nearly all countries. Within the bundle market, Internet Access + Telephone offers are still predominant (24.6%) , but triple play (combining internet, telephone and TV) offers have become more important. Triple play is what we are using at home and I consider it a good option, although the speed is not very high (1MBPS). However, when we lived in Brussels, we were forced to use triple play, although we didn’t use neither the TV nor the telephone, simply because the triple play offer was cheaper than internet only access.

Our big surprise in Belgium was that all providers we checked had only metered offers, limiting the downloadable volume per month (we had 30 GB limit), something which is not done in Bulgaria for years. It turns out that apart from Belgium, Canada, Hungary, Iceland, Ireland and the UK, are also still having some metered offers in terms of limited number of hours per month or limited downloadable volume. The great majority of providers throughout EU, however, are offering unmetered internet access.

The study considers broadband access ranging from 144KBPS to 20+MBPS. The conclusions are that overall the prices decreased since 2007, with prices for lower speeds slightly increasing and prices for higher speeds decreasing. The decrease in prices is more significant in new member states (NMS). In general, within one country, the offers with higher bit-rates tend to be more expensive offers.

There are some countries, including Bulgaria, and also Czech Republic, Finland, Hungary, Latvia, Lithuania, Poland and Slovenia, which offer all the different speed segments from slowest to fastest internet.

When comparing the average Broadband Internet Access Cost (based on the least expensive offers per country and expressed in EUR/PPP) in the New Member States (NMS) with the average in the EU15, prices in the former are higher in 2 of the 7 baskets. In October 2009, the average cost in the NMS is lower in the following baskets: 144-512 kbps incl., 512-1024 kbps incl., 1024-2048 kbps incl., 4096-8192kbps incl. and 8192-20Mbps incl.

The comparison over time of the Broadband Internet Access Cost in the New Member States (NMS) indicates a further decrease of costs, already observed in April 2009, in the baskets 4096 kbps - 8192 kbps incl., 8192 kbps-20 Mbps incl. and 20+ Mbps. This could possibly be stimulating consumers in the NMS into migrating to higher speeds.

This study provides some good news for rural and mountainous areas. The general tendency of decrasing prices makes the internet more accessible, especially in NMS where the prices are decreasing most rapidly. For the countries, which offer a wide range of broadband services with different speeds, rural and mountainous areas benefit of being able to choose different packages, including lower-speed packages at lower prices. The study mentions certain packagesm, which are not offered in all regions of a country, but they mainly include higher speed packages. The tendency to offer bundled packages including internet, telephone and TV also will add value to the service in rural areas.