Consumers Still Do Not Have a Good Grasp of Value, Price in Internet Access
It never has been easy for consumers to figure out “how fast, or how good” their internet access services are, how much they consume, or how much that consumption actually costs. Matters are complicated by the fact that value keeps climbing, while costs per unit keep dropping.
In 2009, the median consumer internet access speed was just 7 Mbps, according to the Federal Communications Commission. But by 2016, speeds had increased by an order of magnitude or even two orders of magnitude, among the tier-one providers.
And even if prices dropped, consumers have changed behavior, upgrading to faster tiers that cost more.
All that matters, as a recent survey of consumer attitudes suggests most U.S. residents support building of municipal broadband networks when service is deemed inadequate.
A substantial majority of the public (70 percent) believes local governments should be able to build their own broadband networks if existing services in the area are either too expensive or not good enough.
Of course, there also is evidence that U.S. residents are ill-equipped to make such determinations.
When asked what download speed they have for their own home internet service, 47 percent were not able to provide an answer. Though 73 percent of U.S. homes have fixed network access, and probably 13 percent are mobile-only for internet access (implying that possibly up to 86 percent of the population buys internet access), about 25 percent of respondents guessed that less than half of U.S. residents had fixed network internet access.
On the matter of retail cost, everyone agrees that cost per gigabyte (consumption), or cost per Mbps (speed) have declined over time, and continue to do so. Beyond that, effective cost per gigabyte depends largely on how much any particular user consumes, compared to the posted rates. In other words, if a consumer buys 10 Gbytes of usage per month for $30, but uses only one GB, then the effective cost is $30 per used GB, even if the nominal cost is $3 per GB.
Volume also makes a huge difference: buy more and price per unit drops sharply.
Typically, retail pricing in the U.S. mobile market is about $10 per GB or less for plans with moderate usage buckets, though pricing for small buckets can reach $15 per GB.
The new unlimited plans make such determinations even more problematic. But it would not be unusual for one GB to cost between $3 and $4 per GB, when a plan has some volume.
Fixed network prices tend to be lower than that, often by an order of magnitude (10 times). The point is that U.S. consumers cannot easily figure out whether value and prices are in line, appropriate or reasonable.