Why your computer is getting cheaper but your broadband bill isn’t

At GigaOM, we closely track the world of broadband, and were curious what has happened to the prices of it relative to some other technology-dependent products and services. So using the most recent data from the Bureau of Labor Statistics, we compared the prices of wireline broadband to that of computers, computer software, and wireless cell phones. We also tracked those against the entire Consumer Price Index.

Here’s what we found: While the price of these other technology-driven products and services has continued to fall over the last few years—personal computer prices have dropped over 44 percent in five years—the prices for wireline broadband have mostly been flat.

So why haven’t wireline broadband prices budged in recent years? The high, fixed costs of broadband means that there hasn’t been a big rise in competition among providers, according to Scott Wallsten, Vice President for Research and Senior Fellow at Technology Policy Institute. Indeed, most Americans don’t have more than two options when it comes to wireline broadband providers. (See how many your area has here. )

In the meantime, people who don’t have broadband want it badly and the for those who do have it, it’s become increasingly indispensable. The result is that there hasn’t been much downward pressure on prices.

The last few months did see a very slight drop  in the price of broadband. It’s unclear whether that’s just a temporary blip or beginning to use the high-speed wireless network LTE as a substitute for wireline broadband. (Of course, if it’s the latter and that trend continues, that could drive down the prices for broadband.) “A big, and open, question is whether LTE will begin to compete on the margins with wireline broadband,” says Wallsten.

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