itguy05
join:2005-06-17
Camp Hill, PA
| Duh, simple business.
Surprise Surprise.... Just goes to show "competition" is merely a panacea that makes us THINK prices will go down.
In almost every case, competition does nothing to prices over the long run. You see, if company X can sell product A for $100 and make Z profit, why would I sell Product A for $50 and make $50-Z profit when I know the market will support the $100 price? That would be stupid.
We've seen the same thing with Cell Phones - There are 3-5 companies in an area and guess what? All are roughly the same price for the same minutes.
Competition is pretty much a farce and almost never results in largely reduced prices for consumers.
Just wait till all the IPTV and FiOS customers get their bills in year 2 and realize they are paying almost as much as cable..... |
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tsu9
join:2001-08-17
Wheeling, IL | "Prices going down" is just ISP-speak for "increasing bandwidth (but not dropping prices)." |
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jslik
That just happened
Premium
join:2006-03-17
clubs:
| reply to itguy05
said by itguy05  : Just wait till all the IPTV and FiOS customers get their bills in year 2 and realize they are paying almost as much as cable..... Excellent point, which brings up the subject of why does everyone want to rush this regulatory giveaway of the farm to the telcos in the name of 'speeding up' deployment. The decisions we make right now we'll have to live with for decades. |
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bamabrad
join:2006-01-27
Port Orange, FL
| reply to itguy05
Key words"paying almost as much". Most of the recent studies show that the majority of consumers prefer lowest cost when the offerings are similar and will switch only when there is a significant price difference or they get upset with their current provider.Maybe what we need are local providers with local government incentives to keep the duopolies from becoming too overbearing. |
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viperlmw
Premium
join:2005-01-25
 ·Qwest.net
| reply to itguy05
said by itguy05 :Surprise Surprise.... Just goes to show "competition" is merely a panacea that makes us THINK prices will go down. In almost every case, competition does nothing to prices over the long run. You see, if company X can sell product A for $100 and make Z profit, why would I sell Product A for $50 and make $50-Z profit when I know the market will support the $100 price? That would be stupid. We've seen the same thing with Cell Phones - There are 3-5 companies in an area and guess what? All are roughly the same price for the same minutes. Competition is pretty much a farce and almost never results in largely reduced prices for consumers. Just wait till all the IPTV and FiOS customers get their bills in year 2 and realize they are paying almost as much as cable..... I would agree. One factor is, at some point, the costs associated with providing service dictates the amount a customer pays. And in more rural areas, that cost can be huge. And I don't know of any company making big profits from broadband access. At some point, it's sold as cheaply as it can be. That point may have been reached. |
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Ahrenl
join:2004-10-26
North Andover, MA | reply to itguy05
Competition is hardly a farce. It completely works.
However, in the absence of a free market, there is none. |
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Mactron
el camino Real
Premium
join:2001-12-16
CM94sv
| reply to itguy05
said by itguy05 :Surprise Surprise.... Just goes to show "competition" is merely a panacea that makes us THINK prices will go down. I had 768/128 for $49.95 a month five years ago. Today I have 3000/768 for $29.95 a month. All with the same ISP.
Funny how competition works. 
--
If only the Verizon CSRs worked this well. |
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ieolus
Support The Clecs
join:2001-06-19
Duluth, GA
| reply to Ahrenl
And you can't have a free market for broadband when only a handful of companies control the pipes into all homes.
The ONLY way to have a free market for broadband is to have an entity that owns the pipe into the home but does NOT sell service... instead, any service provider can use the pipe for a fee, letting the consumer decide who he/she wants service from.
--
"Speak for yourself "Chadmaster" - lesopp |
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itguy05
join:2005-06-17
Camp Hill, PA
| reply to Mactron
quote:
I had 768/128 for $49.95 a month five years ago. Today I have 3000/768 for $29.95 a month. All with the same ISP.
Funny how competition works.
And which ISP is this? During the 5 years I was with Covad, they "upgraded" the speed a couple times, but I never saw it as I was way on the end of the line from the CO. Then again, I was paying $40/mo for 600/128 DSL.
Now I'm with Comcast, paying $4something for 6000/something. Or I could have went with Verizon for $10 phone line+ $20 for 3/something DSL.
Or get "naked" DSL for $50/mo....
So, yeah they are all about the same price. Some charge less for less speed, some charge more for more speed. So far, I'm very happy with my Comcast cable and Internet - about $5 more than I was paying to DirecTV and Covad and I get cooler features and HD, which would have been a $400 inventment with DTV. |
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broadbander
join:2005-07-21
Brooklyn, NY
| reply to jslik
said by jslik :said by itguy05 : Just wait till all the IPTV and FiOS customers get their bills in year 2 and realize they are paying almost as much as cable..... Excellent point, which brings up the subject of why does everyone want to rush this regulatory giveaway of the farm to the telcos in the name of 'speeding up' deployment. The decisions we make right now we'll have to live with for decades. Look to the East. Regulation is reasonable in some markets. |
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timcuth
Braves Fan
Premium
join:2000-09-18
Pelham, AL
clubs:
·AT&T Southeast
|  reply to Mactron
Pretty much the same for me. Three years ago, I had 1472/256 service for $55/mo. Now, from the same provider (BellSouth), I have 3552/384 for $35/mo. It may not be the greatest price in the world, but I am relatively happy with it.
Tim
--
The shortest sentence is, "I am". The longest is, "I do".
~ Project Hope ~ |
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JakCrow
join:2001-12-06
Palo Alto, CA | reply to Ahrenl
The telcos and cablecos don't want a free market. |
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jslik
That just happened
Premium
join:2006-03-17
clubs:
| reply to broadbander
said by broadbander :Look to the East. Regulation is reasonable in some markets. Sounds good, but it all depends on your definition of reasonable regulation, doesn't it?  |
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rradina
join:2000-08-08
Chesterfield, MO
 ·Charter Pipeline
| reply to itguy05
So your theory is that the only way businesses increase revenue is by raising prices or, assuming the market is not 100% saturated, gaining new, never before serviced customers. Assuming the market is saturated, a business cannot increase revenue but can increase profits by becoming more efficient.
I work in the retail grocery industry. Average margins are razor thin single digit margins. Believe me, if we could charge what the market will support, we wouldn't be making single digit margins. I understand Wal-Mart achieves a profit of ~7%. I don't know whether this is on grocery or general merchandise + grocery. Even with sales of $400 billion, Wal-Mart pales in comparison to recent oil company profits. (Not that I deny them those profits -- just stating facts.)
The principle reason why prices aren't dropping in the broadband market is because there is no real competition. There's certainly SOME competition but it's merely a game played by two pigs at a trough determining who can eat more before they pass out from cardiac arrest. That's why we need net neutrality. |
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Alex1976
@telusmobility.com
| reply to viperlmw
I pay 29.99$ canadian dollars a month for 3.5 Mb DSL with unlimited trasfer. My ISP is not my landline provider. This is not a promotional thing.
If we can have such low prices in Canada with our 30 million population and huge land to cover, it means you guys could get a hell of a lot better if the FCC was actually doing it's job. |
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KoolMoe
Aw Man
Premium
join:2001-02-14
Annapolis, MD
clubs:
 ·Verizon FIOS
·Speakeasy
| reply to itguy05
The reason you would reduce the price of your product, reducing your profit per product, is to increase volume.
So at $100/widget, you make $60/widget profit.
You reduce the cost to $50/widget so you're only making $10/widget
If you increase your customers/volume by more than 60%, your profit will actually go up!
(I hate numbers and didn't think hard about that, the percentage could be wrong, but the point is the same).
KM
--
War is a test of power, not a search for truth or justice. Can the violation of the primacy of love, destruction of life, and tearing of society truly be the will of God? |
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Titus Pullo
I came, I saw, I slept
join:2004-06-26
·Embarq
| reply to JakCrow
There's no such thing as a 'free' market. When are people going to realize this and quit throwing the phrase around as if it means something? Neo-liberal trade policies promote anything BUT a market that inspires free trade. Getting 'govt off the back of business' is simple code for giving away the farm to business interests, period.
--
"I am not young enough to know everything."
Oscar Wilde |
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calvoiper
join:2003-03-31
Belvedere Tiburon, CA
| reply to rradina
This is the key point--there isn't competition with a duopoly.
Saying there isn't competition in cellular because prices are similar is a lie. Prices are similar in markets with several providers because competition drives all prices towards long-run marginal cost, not because there is collusion between the players.
Any commodity from gasoline to laundry soap to fast food sees some similarity in pricing--if not, the unreasonably priced product dies. Yes, product distinctions also form part of competitive appeal--but pricing also adjusts for those changes.
And back to cellular, I remember the '80's and early '90's when there were just two cellular providers in each market. We had no subsidized handsets, no free night/weekend minutes, no "rollover", and I was paying about $45 for service and 35 minutes per month--overages at $0.30 plus per minute. The top of the line was a "grand pack"--a thousand minutes, for about $150 per month. Competition has come a long way--and one of the true benefits of competition IS similar pricing at a low level, meaning you can make your choice of service based on factors other than pure price and still get a reasonable deal.
calvoiper
--
VoIP--the death knell of remaining voice monopolies! |
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roamer1
sticking it out at you
join:2001-03-24
Atlanta, GA
clubs:
| reply to itguy05
said by itguy05 :We've seen the same thing with Cell Phones - There are 3-5 companies in an area and guess what? All are roughly the same price for the same minutes. Huh? Most markets have two "premium" carriers (Verizon and Cingular) with nearly identical pricing, two carriers (Sprint Nextel and T-Mobile, or in the Carolinas Sprint Nextel and SunCom) with slightly cheaper pricing, and one or more local/regional carriers with lower pricing (Alltel, US Cellular) if not unlimited service (Cricket, Metro PCS, Revol). The Northeast Corridor is the major exception to the rule in that the third category of carrier generally doesn't exist in that part of the country because the first two categories of carriers ate up all the spectrum. 
-SC
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"it seems like all you ever buy is Abercrombie and cell phones" --a friend |
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fiberguy
My views are my own.
Premium
join:2005-05-20
| Why do you not classify sprint with verizon and cingular? are you talking pricing alone? or the type of "carrier" they are?
Bottom line is ever carrier has their gimmic and as with all carriers, they ALL give you alot of stuff for a package but always manage to leave "something out" or something to be less desired.. the catch.
Sprint, for example, has the free incoming plans. They are about $39.99 a month for 350 minutes - they have nights and weekends and national long distance. (Now includes nationwide direct connect) HOWEVER, the minutes are low and the overage minutes are at 40 cents a piece. Their fair and felxible plans are nice as they are $5.00 per 100 minutes and the minutes are higher, but you don't get nationwide direct connect and your incoming calls are charged for so the higher minutes aren't THAT good compared to the free incoming plan.
Like I said.. unless you can get an unlimited plan, there is always something that will ultimately drive your bill up if you are not carefull. |
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