Broadband prices fell sharply in first-half of 2004

Global broadband prices fell sharply in the first half of the year as cable operators moved to meet the challenge of lower prices from Digital Subscriber Line (DSL) services, according to a report by UK researcher Point Topic.

Monthly rental fees for broadband cable services dropped 16 per cent in the first six months of this year, while DSL fees were slashed by 13 per cent, it said.

"DSL has been getting more users and cable modem providers are trying to compete and get back share," senior analyst at Point Topic, Haroon Butt, said.

Broadband cable service providers engaged in aggressive price cuts during the first half of the year to bring their fees closer in line with those of DSL services, which had been previously reduced to attract new subscribers, Butt said.

Cable operators surveyed said that the average monthly rental rate for entry-level cable modem services declined from $US39.20 to $US32 over the period, a reduction of $US7.20, while DSL prices dropped by $US2.50 to $US29.50 in the first half of the year.

These figures reflected average global pricing at purchasing power parity (PPP) exchange rates, Point Topic said.

Only one provider, Yahoo Japan, bucked the trend and upped its prices for DSL by 20 per cent, Point Topic said. However, the researcher said Yahoo Japan remained the cheapest DSL provider in the world at PPP rates.

Price cuts primarily occurred in Asia and North America but European operators had recently jumped on the price-slash bandwagon, Butt said.

Cable modem operators had more than price cuts in their arsenal, however, he said.

"It's not just about pricing - it's also about services," he said. "They have a triple play. They can offer cable, Internet and voice."

It would be interesting to see how the cable modem and DSL providers squared off at the end of the third-quarter, Butt said, as the war between them became increasingly focused on services.

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