Bang for buck: what you can get for your broadband dollar

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October 14, 2008

Without a doubt our best broadband option is gained by living in a fibre-installed apartment in Japan. We would be getting a symmetric 100Mbit/s service with unlimited awesome experience at an extremely low price.

For most consumers, choosing a broadband plan is an exercise in identifying the “best” service for a given budget.

While the headlines tend to focus on the downlink bandwidth – faster is better – the consumer’s purchase decision is more complex as it involves prioritising various criteria, based on individual requirements and budget. These criteria can include:

  • downlink bandwidth
  • uplink bandwidth
  • download allowance (sometimes called the “data cap”)
  • contention ratio
  • bundled extras

What if we undertook a similar exercise for a cross-country comparison? That is, to identify what types of services we could purchase for a given budget from a range of providers in the Asia-Pacific region, Europe and North America?

Our monthly budget is NZD50, which corresponds to AUD46.22 or USD32.38. Obviously, we need to allow a little flexibility with prices due to the differences in service offerings, so we are considering only those plans that are within 20% of our budget amount (Exhibit 1).

Without a doubt our best broadband option is gained by living in a fibre-installed apartment in Japan. We would be getting a symmetric 100Mbit/s service with unlimited downloads – offering the consumer an awesome experience at an extremely low price.

Indeed, all of the fibre options look appealing, but of course the drawback is that you must live in the right place in order to have access to fibre. If our Japanese resident lived in a house rather than a fibre-connected apartment, he would be paying almost twice as much for his fibre broadband. In contrast, our Korean resident pays the same price no matter where she lives, but the resultant bandwidth depends on what technology – FTTH, VDSL or ADSL – is connected to her home.

If we lived in France or Portugal, our monthly budget will also cover both our telephony and our pay TV services, as well as giving us unlimited broadband downloads. Variations of bundled offerings – which can include WiFi access, routers and online storage, as well as telephony and pay TV – are available in other markets, providing us with additional value-for-money for our budget.

While the New Zealand and Australian providers have comparatively good downlink bandwidth, the relatively low data caps mean that users are penalised through either higher charges or bandwidth constraints if usage goes beyond the monthly limits. And our bundled options do not have quite the same appeal as unlimited telephony or pay TV.

So why is there such a huge difference in what the consumer can buy for the same budget? Fundamentally, it is due to differing local conditions that affect the underlying costs – geography, demographics, regulations, government subsidies – together with the level of competition. Sure, we can have super-fast, super-cheap broadband if we lived in a Japanese apartment, but if we prefer to live in lower density environments, prices will be higher to reflect the costs of broadband provision.

Without a doubt, technology developments are enabling prices to fall, and the economics of high-speed broadband will improve further as uptake increases.

Exhibit 1: Broadband services available for a monthly budget of NZD50 ±20%, October 2008. FTTH services are in bold text – all other services are ADSL. [Source: provider websites]

ProviderPrice (NZD)Maximum downlink speedMonthly data limitNotes
Asahi-Net with NTT East (Japan) 41.11 100Mbit/s unlimited Symmetric service. In apartment buildings with NTT Mansion equipment installed
KPN (Netherlands) 43.57 3Mbit/s unlimited Includes wireless modem
Profiber (Denmark) 44.62 1Mbit/s unlimited Symmetric service
Tiscali / Pipex (UK) 45.23 16Mbit/s unlimited Business grade service
Swisscom (Switzerland) 45.78 5Mbit/s unlimited Includes router
Verizon (US) 46.31 3Mbit/s unlimited Plan requires existing Verizon phone
eircom (Ireland) 46.71 3Mbit/s 30GB Includes 1GB storage and access to sports channel
Telia (Sweden) 47.72 8Mbit/s unlimited Includes 2GB storage
TDC (Denmark) 48.39 8Mbit/s unlimited Includes 1GB storage
Bell Canada 48.47 7Mbit/s 60GB Plan requires at least one other Bell Canada service. Includes wireless modem, unlimited WiFi access
BT (UK) 48.69 8Mbit/s 15GB Includes 5GB storage, wireless router plus 350 minutes WiFi access per month and free national offpeak calls
Telecom New Zealand 49.95 24Mbit/s 10GB Requires Telecom line and using Telecom for all toll calling. Includes Flickr Pro account
Orange (France) 50.85 18Mbit/s unlimited Includes unlimited calls to fixed lines and pay TV
Free (France) 51.01 100Mbit/s unlimited 50Mbit/s uplink. Includes 10GB storage, telephony and pay TV
Telenor (Norway) 51.80 1.5Mbit/s unlimited Includes 1GB photo album
Internode (Australia) 54.03 24Mbit/s 10GB Includes some unmetered content services
TPG (Australia) 54.08 24Mbit/s 50GB Download limit is 25GB peak, 25GB offpeak. Includes 500 minutes of VoIP calls
Clix (Portugal) 54.70 24Mbit/s unlimited Includes pay TV, unlimited national telephone calls and unlimited international calls to selected countries
Bredbandsbolaget (Sweden) 54.73 100Mbit/s unlimited Includes 10GB storage and telephony
Siminn (Iceland) 56.97 1Mbit/s 4GB Includes unlimited domestic downloads, 500MB storage and pay TV
Korea Telecom 57.65 50Mbit/s unlimited Symmetric service. Same price for ADSL (8Mbit/s download, 640kbit/s upload) and VDSL (50/10Mbit/s)

Notes for tariff analysis:

  • Prices include value added tax (at the rate relevant to that country) and are in New Zealand dollars (NZD).
  • All prices were converted to NZD using 2007 Purchasing Power Parity (PPP) rates sourced from the World Bank.
  • Providers selected for illustrative purposes only – inclusion within the sample does not imply endorsement of either the provider or the plan. Within each country there are many providers offering a range of different plans.
  • All plans were current as at October 2008.
  • Note that on its website Telecom New Zealand claims that its most popular plan is NZD39.95 per month (if you have a Telecom line and use Telecom for toll calling – if not, this plan is an additional NZD10).