BDA broadband among slowest, most expensive???

This article was posted in the Bermuda Sun today and this particular topic always bothers me as it is taken out of context almost all the time. We have the ongoing issue of being 800 miles from anywhere and surrounded by water. That creates a cost that is just not going to easily go away. In any event, here follows the article for your own thoughts.

The least for the most – island’s pricey Internet connection falls far behind other countries

Mark Kennedy
Sub-editor, Bermuda Sun

Broadband Internet connections offered in Bermuda are among the most expensive in the world, while at the same time being among the slowest, a study released yesterday says.

The fastest Internet connection offered to residents here is 2mbps – far behind the speeds offered in other developed countries, according to a report released by the Computer Society of Bermuda.

Bermuda’s average broadband download speed is 1.075mbps, putting it below Turkey in a list of available speeds offered to broadband users in Europe, North America and Asia.

By contrast, Japan’s average download speed is 93.6mbps, according to the study.

But at $143.25 a month on average, Bermuda ranks first place in terms of cost for a broadband connection when compared to the 30 ‘First World’ countries profiled in the Organization for Economic Cooperation and Development – the source for the CSB study.

“Bermuda does not find itself in a leading position,” the report concludes. “Even on a world stage, it appears challenged on price and service delivery.”

The response to the report from major telecoms industry players was varied.

Some said the costs associated with the island’s broadband services were the result of unfairly high mark-ups from carriers like Cable & Wireless and TBI, or that the infrastructure was insufficient and in need of investment. Still others said it was due to the number of ISPs competing in Bermuda’s limited marketplace.

“The report is accurate,” said Jamie Thain, a director with Transact, an Internet services provider.

“All ISPs are offering 2 megs for a reason. If you have to pay staff, duties, and all the other expenses associated with operating in Bermuda, you wouldn’t profit by offering it for $69 per month,” he said.

“The reason for the high cost is that we have to pay somewhere between 30 to 50 times more than what we would pay in the U.S.,” Mr. Thain added.

He said the three ISPs – North Rock Communications, Logic Communications and Transact – don’t have their own submarine cable connecting Bermuda to the rest of the world, so they have to buy it from carriers like Cable & Wireless or TBI.

But that may change in the future.

Paying for that connection “is so expensive that we’re applying to lay cable because it’s cheaper,” said Mr. Thain, referring to the consortium formed by KeyTech, Transact and North Rock in September to invest in an undersea cable of its own.

A licensing application for that investment plan is currently before government.

But Cable & Wireless CEO Eddie Saints said it was over-simplistic for the ISPs to blame the carriers for the high connection costs.

“The ISP will blame the carriers, but the reality is that Bermuda is a high cost place to operate in,” he said.

“There’s very little gouging taking place in the market. There’s no simple solution. We have fixed costs … [but C&W] has made significant investments in undersea cable,” Mr. Saints said. “This should bring the price down.”

Another ISP said the high cost of broadband here was in part due to Bermuda’s location and its small economy of scale compared to bigger countries.

“Some of it is based on where we are. Between Bermuda and the U.S. there’s 700 miles of open ocean,” said Paul Coleman, VP of marketing for Logic.

“We can only serve up to 65,000 customers. There’s not the economies of scale as elsewhere,” he said.

That sentiment was echoed by CellularOne COO Michael Leverock.

“Bermuda carriers have to set pricing based on their costs which tend to be on the high side given economies of scale,” he said. “This is due to the significant infrastructure costs and the size of the market.

“If one were to examine the countries in the [CSB report] comparison, they are larger jurisdictions with more favourable economies of scale,” he said.

CableVision – which just finished blanketing the island with its high-speed cable for its Broadband Link service – maintained that the island’s telecoms industry was highly developed.

“While I recognise that Bermuda’s geographic isolation and small population base make it an interesting case study, the telecommunications industry in Bermuda is robust and the island’s technological infrastructure is advanced,” according to CableVision general manager Terry Roberson.

The report can be found in its entirety at

As you can see, there is no real finger pointing going on, rather the basic fact is that it is so much more expensive to provide the services in Bermuda due to small numbers of subscribers, high cost of equipment, economy of scale lacking, shipping, high duties and the list goes on and on.

While I would be the first in line to sign up for 100mb for $29.95 a month, I am also grateful for what we do have here.

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