Why is our internet still so expensive?

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rossmnz

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#39505 15-Aug-2009 12:56

Just read the following article:

http://www.stuff.co.nz/business/industries/2753621/Southern-Cross-Cable-defends-its-position

"Prices for circuits to the US, from both Australia and New Zealand, have just been reduced by 15 percent, bringing reductions over the last 18 months to more than 50 percent.

The new price for 5 Gbps of restored capacity represents around US28c (NZ41c) per gigabyte downloaded from the US. This has reduced by 86 percent from $US1.95 per gigabyte in December".

Has this impacted on the price ISPs charge us? No

This really pisses me off, especially with my ISP telstraclear just posting a good profit again. no bloody wonder. The Government needs to have a telecommunications pricing watchdog. Its total BS.

The force is strong with this one!

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455 posts

Ultimate Geek

#246946 15-Aug-2009 13:22

Well, yes it has for me. 2 months ago, was getting 20GB for $59.95 through Telecom, now have unlimited.

rossmnz

507 posts

Ultimate Geek

#246948 15-Aug-2009 13:26

but this is capped speed should you want to use torrents to download anything.....say a beta copy of a game or whatever.

The force is strong with this one!

Basekid

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Master Geek

#246954 15-Aug-2009 14:04

Oh gosh, not this disucssion again.

Internet prices are a product of a variety of factors, inlcuding population density, land location, wealth of the nation etc.

I used to compare our internet with my old internet I had in Holland, but decided that is completetly useless. The netherlands is the size of Canterbuty, and has 16mil inhabitants. No wonder they can have 50mbit - no cap internet for 60 dollars a month.

New Zealand however only has 4 mil people, and is quite a big bigger. Plus, we are geographically very far away from everything, which also adds to costs (underseas cables etc)

In the end, this is why our internet is more expensive than places like Europe and Japan.

Screeb

698 posts

Ultimate Geek

#246955 15-Aug-2009 14:12

Basekid: Oh gosh, not this disucssion again.

Internet prices are a product of a variety of factors, inlcuding population density, land location, wealth of the nation etc.

I used to compare our internet with my old internet I had in Holland, but decided that is completetly useless. The netherlands is the size of Canterbuty, and has 16mil inhabitants. No wonder they can have 50mbit - no cap internet for 60 dollars a month.

New Zealand however only has 4 mil people, and is quite a big bigger. Plus, we are geographically very far away from everything, which also adds to costs (underseas cables etc)

In the end, this is why our internet is more expensive than places like Europe and Japan.

That has nothing whatsoever to do with the topic at hand. rossmnz is wondering why prices haven't DECREASED when the cost of international bandwidth has. That has nothing to do with how NZ broadband compares to other countries.

Batman

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#246968 15-Aug-2009 15:46

why is electricity so expensive? why are mortgages so expensive? why do CEOs get paid millions while companies complain they need to cut flab everywhere else -

if the internet is not expensive the rich wont get richer, the poor wont get poorer, markovnikov's rule wont hold true. africa will be covered in oil and grow food from sand and the middle east will starve.

hmm ...

insane

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#247095 16-Aug-2009 00:16

Because unless you're buying significant quantities you will not get it at the prices discussed. You might complain that no savings have been passed onto customers but just look how much data usage as increased over the same time. Demand is increasing at a greater rate than the prices falling.

I can only think of two ISPs in NZ that would have need for 5Gbps or more of international connectivity, its an insane amount.

Screeb

698 posts

Ultimate Geek

#247105 16-Aug-2009 02:37

insane: Because unless you're buying significant quantities you will not get it at the prices discussed. You might complain that no savings have been passed onto customers but just look how much data usage as increased over the same time. Demand is increasing at a greater rate than the prices falling.

I can only think of two ISPs in NZ that would have need for 5Gbps or more of international connectivity, its an insane amount.

TelstraClear haven't increased their data caps in more than 3 years. Since then, the cost of international bandwidth has decreased. Therefore, savings are NOT being passed onto customers, as data usage is capped at the same amount (or the customer pays for the extra usage).

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nate

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#247193 16-Aug-2009 14:27

rossmnz: Has this impacted on the price ISPs charge us? No

Don't ISPs purchase international bandwidth for a set rate for a x amount of years? So even if there is a price drop they have to wait until their contract is up to renegotiate? Can someone confirm/deny?

rossmnz: This really pisses me off, especially with my ISP telstraclear just posting a good profit again. no bloody wonder. The Government needs to have a telecommunications pricing watchdog. Its total BS.

Change providers.

Byrned

455 posts

Ultimate Geek

#247304 16-Aug-2009 18:45

rossmnz: but this is capped speed should you want to use torrents to download anything.....say a beta copy of a game or whatever.

It may be managed, but this month I have downloaded over 200GB, compared to what I normally do which is around the 15-20GB mark.

No doubt after a novel month my usage will go back to normal levels.

insane

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#247372 16-Aug-2009 21:24

nate:
rossmnz: Has this impacted on the price ISPs charge us? No

Don't ISPs purchase international bandwidth for a set rate for a x amount of years? So even if there is a price drop they have to wait until their contract is up to renegotiate? Can someone confirm/deny?

rossmnz: This really pisses me off, especially with my ISP telstraclear just posting a good profit again. no bloody wonder. The Government needs to have a telecommunications pricing watchdog. Its total BS.

Change providers.

It may depend on how much you're purchasing but I've never heard of anyone being locked at a specific price for a length ot fime (doesn't mean it hasn't happened to someone else) .If you have a competitor who will offer bandwidth at a lower rate then they cannot afford to tie you into a contract like that. Quantities purchased can be changed in an instant if the physical connectivity is in place, its normally the accountants who dig their heels :)

We have a fairly good mix of international transit providers now, I may have even missed one.

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adresdendoll

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Master Geek

#247717 17-Aug-2009 15:19

"A spokeswoman for Telecom Wholesale told NBR that ?When Telecom next buys capacity from Southern Cross, the cost reductions will naturally be reflected in our prices and will flow through into the market.?

http://www.nbr.co.nz/opinion/chris-keall/decoding-southern-cross-cable-s-price-cuts

The NBR covers this topic quite nicely.

Ragnor

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#247723 17-Aug-2009 15:24

I recall reading about that before, if you buy direct SXC it's for a term. I believe all ISP's apart from Telecom and Telstra buy from resellers (eg: Asianetcom/Pacnet, Verizon/Alter.net) in NZ as they simply don't have the scale.

Also don't forget ISP's have hardware/infrastructure costs too and more importantly labour costs, when have you ever see labour costs fall?

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#247731 17-Aug-2009 15:35

Also this statement is really ambiguous:

The new price for 5 Gbps of restored capacity represents around US28c (NZ41c) per gigabyte downloaded from the US. This has reduced by 86 percent from $US1.95 per gigabyte in December 2003.

Sure the price per year for 5Gbps of dedicated bandwidth for xyz years has reduced however how does that really translate to price per GB per month without assuming utilization for that circuit, 100%, 75%, 50% utilization.. that has a big affect of the "price per GB" that comes out the other end.

rossmnz

507 posts

Ultimate Geek

#247966 17-Aug-2009 23:09

I realise that ISPs have labour costs, hardware update costs, Ferarris dont run themselves, but surely SURELY in this ever changing market direct drops in product pricing should be passed on immediately to consumers.

World class broadband at decent prices is not actually asking that much. Its extremely do-able even here in NZ

The force is strong with this one!

insane

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#247975 18-Aug-2009 00:50

I think its a pretty pointless argument, when sweet crude oil prices dropped to $43 per barrel from $140 we didn't see massive reductions in the price of refined petrol. Sure prices fell from $2.10 to $1.50 but that was it, we didn't see petrol prices fall to $0.65 / Litre.

Bandwidth is only part of the cost of broadband, the port cost and bandwidth are the major components but infrastructure , staffing, adversing all counts towards the end price you pay. ISPs are just like any other business and are out there to generate wealth for their investors.

If you want cheaper BB then lobby for cheaper port prices, you won't find an ISP besides Telecom who won't support you.

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