Pricey internet cost gives legislators food for thought

The Royal Gazette

Tech Tattle by Ahmed ElAmin

“BERMUDA has the best internet price in the world,” proclaims the latest bulletin from the Computer Society of Bermuda, with tongue firmly in cheek. Some wag who sends out their regular postings has compiled the latest Organisation for Economic Co-operation and Development (OECD) report on the state of telecommunications in member countries.He then compared Bermuda’s price of $184.95 for an 0.840 kbps broadband connection to claim the Island tops every other country, making it the most expensive buy. In the Cayman Islands, a 0.760 kbps connection will set you back $52 a month. The OECD compared prices for its member countries using purchasing power parity based on what their currency could buy compared to the US dollar. Using this measure Turkey follows Bermuda as the second most expensive place, at $115 a month for a 2 Mbps connection. Next is Mexico at $60.

US residents pay $3.33 per month for 1 Mbps service, Sweden pays 63 cents, and Korea 45 cents.

“When you talk about Bermuda, tell them about our leading global position in 256k broadband penetration and our outstanding price for 1 Mbps service,” says CSB’s marketing person.

The OECD report, released last week, makes some observations about the trends in telecommunications around the world, all of which are affecting Bermuda, or as in the case of prices, are not.

We may know the reasons — small customer base, small number of providers, economies of scale, history — but that doesn’t mean they don’t hurt the pocketbook.

An OECD analysis of 372 broadband offers shows that DSL broadband prices from the incumbent fell an average of 19 percent in one year from September 2005 to October 2006. At the same time, the comparable speeds of these packages increased 29 percent over the same period.

Cable broadband prices followed a similar trend, with prices falling by 16 percent and speeds rising by 27 percent.

The least expensive monthly subscription for always-on broadband access was in Sweden where $10.79 (PPP) pays for a 256 kbit/s connection from the cable provider Com Hem. The fastest low-end broadband connection was in France from Neuf Telecom where subscribers received 20 Mbit/s second for $16.36 (PPP) per month.

“Broadband remains one of the main growth areas for telecoms firms and one of their key challenges, looking ahead, will be to decide how much and how soon they should invest in next-generation networks, such as fibre-optics, rather than continue their investments in traditional copper networks,” the OECD stated.

The trends also show a distinct shift away from paying for voice to paying for data, which can also be used to transport voice. Price decreases and improved services have been the most marked in markets characterised by intense competition. Competition may be the product of regulatory intervention, as in the case of local loop unbundling, or may be the result of new infrastructure-based competition, the OECD found.

The OECD also found several emerging policy issues affecting the sector. The emergence of fibre-based connections to homes has revitalised arguments around unbundling. The debate is increasingly important as reliance on copper-based networks is set to diminish, the OECD stated. Some of the key decisions will involve unbundling requirements for street cabinets or fibre connections running directly to homes. Another key policy issue ahead in telecommunication markets will be how to promote investment in telecommunication networks. “These investment debates will likely include discussions of the role of government participation in facilitating, providing or funding Internet access services,” said the OECD. The report certainly provides some fodder for thought among Bermuda’s legislators.


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