Going online from Bermuda costs more than anywhere

The Royal Gazette

By Scott Neil

Internet users in Bermuda pay amongst the highest prices to receive some of the slowest connectivity in the developed world, according to new comparisons. If you live in Japan the cost of broadband internet per megabit per second works out at $0.22, while in Turkey it would cost $81.13. In the US the price is around $3.18 and is only marginally dearer in the UK at $3.62. And Bermuda? Somewhere around $90, although the Computer Society of Bermuda has come up with its own estimate of a staggering $184.

That figure, which admittedly is said to include access provider and ISP service costing, is misleading according to one of Bermuda’s Internet Service Providers (ISPs) which claim they in turn are hammered by the sky-high costs they are forced to pay for bandwidth carrying capacity from the likes of Cable & Wireless and TeleBermuda International.

North Rock Communications states it is paying 35 times the price for the same carrier service it can buy on the US mainland.

Bermuda’s isolated location is a further reason for internet access to cost significantly more than elsewhere in the world.

A consortium of Bermuda ISPs; North Rock, Transact and KeyTech, are currently seeking to break the carrier duopoly of the C&W and TBI by bidding to lay a new $25m undersea cable that will allow them to bypass the big two.

An imminent re-structuring of the Bermuda’s telecommunications sector should allow for a more open market with greater freedom and competition.

It could be up to a year-and-a-half before a new cable is brought into play and cheaper and faster internet arrives for Bermuda.

The Computer Society of Bermuda estimates the average speed of internet for the Island’s market is a relatively sluggish 0.840 kilobits per second, compared to the fastest average market speed enjoyed by Japan at 61 megabits per second.

The Organisation for Economic Co-operation and Development (OECD) has carried out a global survey of OECD countries and found that Sweden has the cheapest entry level broadband per month costing $10.79, while in the US it is $15.93. And while Bermuda chugs along with a sub-1Mbps market average for its internet service, Sweden, Japan, Korea and Finland offer net users speeds of up to 100Mbps, ten times the OECD average.

Bermuda is not an OECD country and so does not figure in the report, but has been compared to the others through calculations of the Computer Society of Bermuda.

Jamie Thain, a founding member of the Bermuda ISP consortium AccessBermuda, which is seeking to win the contract to provide a new submarine telecommunications cable from the US to Bermuda, agreed the speed of the average speed for internet on the Island is around the 0.840kbps suggested, but the price per month for 1Mbps would figure around $90.

“One of the things going on is that we have to buy bandwidth from our competitors (C&W and TBI) and we are being charged 15 times or more what is charged in the US,” he said.

The prospect of the ISP consortium controlling its own cable to the Island opens up the possibility of cheaper internet in Bermuda and faster connectivity.

“Even if it does not massively reduce prices at least we can increase the bandwidth,” said Mr. Thain, CIO of Transact parent Igility.

He said the consortium is anxious to end the duopoly of C&W and TBI in the carrier cable stakes.

“We do not see any reason for C&W and TBI not to sell bandwidth near to what they sell it to commercial customers. At the moment we are trapped because we have to buy bandwidth from them ‘upstream’.”

Customers faced with paying around $29 a month for 128k bandwidth, staggered upwards to $119 for 2Mbps, opt for the lowest package because they only want email and light surfing on the internet, explained Mr. Thain.

“What happens in the US is it does not matter what speed you take because you can buy upstream bandwidth fairly cheaply, like 5Mbps for $29.”

He said if Bermuda ISPs could buy their bandwidth upstream from the same carriers in the US they could lower costs.

Bids to install a new submarine telecommunications cable from Bermuda to the US were invited, as of last week, to submit their tenders before September 6.

“AccessBermuda believes it has an excellent business case,” said Mr. Thain. “Bandwidth will go up, although it is too early to determine the price cost.”

Why is it still likely to cost more for Bermuda web users than others around the world? Because the investment cost of putting in undersea cables, such as the proposed $25m new one, must be recouped over time.

And if the restructuring of Bermuda’s telecommunications sector leads to a rule that carriers such as C&W and TBI must sell bandwidth at wholesale prices, won’t that do away with the need for a new cable run by the ISPs?

“They could still put the wholesale price up to what they want it to be,” points out Mr. Thain.

Che Baker, marketing manager for North Rock Communications, added: “In Bermuda, North Rock pays 35 times the rate for bandwidth compared to what we pay in the US.

“North Rock has requested direct access to bandwidth in order to decrease prices for over seven years. Fortunately, the Ministry of Telecommunications is now seeking to address the issue.

“In addition METEC have issued the tender to allow a new undersea cable to be built. We have seen a sharp decrease in internet rates over the last two years. Once access to international bandwidth has improved, we expect that pricing will further decrease as bandwidth availability increases dramatically.”

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