Price Competition

Maybe for the first time ever, we’re seeing some real price competition affecting the largest internet service providers. Fierce Network recently quoted Comcast CFO Jason Armstrong as saying that he is seeing irrationally low prices from some fiber overbuilders who are selling gigabit broadband for as little as $30–$40 per month. He says that it costs Comcast as much as several thousand dollars to convert an HFC customer to fiber, and that he can’t understand the rationale behind selling fiber broadband that cheaply. Five years ago I predicted that broadband would routinely be priced at $100 or more, and there are noncompetitive markets today where that is the price. But there are a whole lot of markets now where prices are a lot lower than that. Of course, none of the big companies price strictly by market anymore—they price by customer and neighborhood, so what we’re really likely to see are competitive and non-competitive neighborhoods in cities, with my bet that the low-income neighborhoods will be paying the most for broadband.