Best of the ISP-Lists

Why Isn't My Home Phone a T-1 Line?

Members of the ISP-Bandwidth list discuss the price of bandwidth. Is it true that a T-1 could cost $25 per month? Maybe when Ferraris are priced at little more than the cost of manufacture, we'll see cheaper T-1 lines.

[May 21, 2001]

On the ISP-Bandwidth list in May, LO inquired,

"Why can't I get a T-1 to my house for the same cost as a phone line? Granted, the T-1 carries 24 lines on it and requires some special equipment on my end, but even still, it's not asking much to be able to drop a T-1 to my house for $25 a month. Why is bandwidth so expensive?"

A number of respondents claimed the pricing is just what the market will bear:

[SB offered] "It's simply a case of supply and demand. Where you have a lot of competition and facilities, then bandwidth is competitively priced. My guess is that we'll see bandwidth pricing stabilize, and even go up on certain routes, mostly because of supply and demand."

[TR agreed] "Who cares what it costs if you can make a profit selling it? The last time I checked, a Ferrari cost way too much for me, but they still sell every one they make."

Others added more factors to the mix:

[VB explained] "Most importantly, POTS telephone service is heavily subsidized by the Universal Service Fund. Plus, software/firmware/hardware for the average computer is very generic, while most telecom hardware is very specialized. Specialized equipment that only has a very limited application just costs more."

[JE agreed] "If everyone was able to receive a T-1 for $25 a month, there would be a tremendous increase in traffic, and the infrastructure would not be able to handle the load. It takes almost two months now to get a $1000 T-1 installed: I would hate to see the wait for a $25 T-1."

[DB contended] "Bandwidth is so expensive due to the infrastructure and equipment costs associated with it. The providers have huge debt incurred when trying to build out a network. Look at the cost of purchasing dark fiber or DWDM gear: this has to be recouped somewhere, or everyone would go the way of Northpoint and Covad."

JS suggested that the pricing will likely only increase in the future:

"It may take another year or two for the market to shake out, but once it has, bandwidth pricing will either stabilize or even increase. The competition will be fewer in number and working from more or less similar business models. Bandwidth is not a commodity, and won't become one until broadband is readily accessible by all. That appears to be a long way off."

— End

 

Related articles:
	[Apr. 24, 2001]	100 Mbps for $1000 Per Month
	[Apr. 5, 2001]	T1s for $700 a Month?
	[Jan. 18, 2001]	Copper Mountain's T1 Solution