Tuesday, December 09, 2003
Price, not speed.
Close on the heels of my earlier post about Time-Warner's VoIP plans comes the news of the Forrester Report that seems to suggest that broadband customers care more about price than speed.
As high-speed Internet service becomes more mainstream, the latest customers are more price-sensitive than the techno-geeks who were the first to abandon dial-up modems for faster, always-on links to the Web, according to the study released on Tuesday.
"Mainstream consumers of broadband are more price-sensitive, lower-income, and less technology-optimistic than early adopters," wrote Forrester analyst Jed Kolko, who expects the importance of price to become more pronounced over the next several years. High-speed DSL services offered by telephone companies cost roughly $30 a month, compared with cable modem services that cost $40 to $50 a month, the firm said.
Game, set and match to the Baby Bells? I certainly don't think so. First of all, cable dominates the broadband market today -- 65% -- and it'll be difficult to break the stranglehold. But more importantly, I do remember the pundits out there who suggested that it would be difficult to migrate folks from dial-up to broadband because they were price-sensitive. Someday, these guys will learn that it's about the content and if customers find *useful* content online, content that you could better access at higher speeds, they will move towards whatever technology offers them speed at reasonable prices.
For the stuff you get online today, there might be no difference between DSL and cable, though there may be a difference between dial-up and broadband. But that needn't be the case tomorrow when customers might be willing to pay a higher price for 3 MBps on the downlink than they do for 768 KBps down. And for all you know, legit MP3 might be the tipping point.
As high-speed Internet service becomes more mainstream, the latest customers are more price-sensitive than the techno-geeks who were the first to abandon dial-up modems for faster, always-on links to the Web, according to the study released on Tuesday.
"Mainstream consumers of broadband are more price-sensitive, lower-income, and less technology-optimistic than early adopters," wrote Forrester analyst Jed Kolko, who expects the importance of price to become more pronounced over the next several years. High-speed DSL services offered by telephone companies cost roughly $30 a month, compared with cable modem services that cost $40 to $50 a month, the firm said.
Game, set and match to the Baby Bells? I certainly don't think so. First of all, cable dominates the broadband market today -- 65% -- and it'll be difficult to break the stranglehold. But more importantly, I do remember the pundits out there who suggested that it would be difficult to migrate folks from dial-up to broadband because they were price-sensitive. Someday, these guys will learn that it's about the content and if customers find *useful* content online, content that you could better access at higher speeds, they will move towards whatever technology offers them speed at reasonable prices.
For the stuff you get online today, there might be no difference between DSL and cable, though there may be a difference between dial-up and broadband. But that needn't be the case tomorrow when customers might be willing to pay a higher price for 3 MBps on the downlink than they do for 768 KBps down. And for all you know, legit MP3 might be the tipping point.
