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Internet Access Is Costly Here, Report Shows

By Andrew Gray, posted Aug 19, 2011


North Carolina was recently ranked as having some of the most expensive Internet access in the country.

A report by Bandwidth.com, a broker of Internet connectivity, listed the cost of access for all major cities in the U.S. Eight out of ten of the most expensive cities to buy bandwidth in the U.S. are in North Carolina, with Wilmington coming in as the eighth most expensive place to buy bandwidth in the country.

The map of the most expensive cities is available at http://broadband.com/map and comments about the data are available at http://blog.broadband.com/2011/03/30/north-carolina-broadband-value-behind-the-numbers.

The only city in the report to have more expensive bandwidth than a North Carolina city is Anchorage, Alaska. Wilmington has an average price for bandwidth of $56.83 per mbps (megabytes per second) per month, based on broadband’s calculations.

A note on the report explained that “value is simply defined as cost [divided] by speed. The North Carolina cities that made the list have poor upload speed, paired with relatively high Internet prices. Upload and download speeds factor equally in our calculations.”

In comparison, the least expensive city in the country, Virginia Beach, Va., has an average cost of $5.41 per mbps per month according to the report.

Internet comes via a range of methods, including fiber optic, cable, DSL and wireless. It also comes in two types, asymmetrical and symmetrical.

With asymmetrical technologies such as cable and DSL, the bandwidth for downloads is not the same as the bandwidth for uploads. For fiber optic offerings, such as a T1, T3 or OC3, the bandwidth is the same both ways.

The low upload speeds cited in the report impact business users more than residential users. Residential plans usually offer speeds that are five or more times faster on the download than on upload speed. These speeds are fine for browsing, watching video and downloading files, but for business users who want to use high-bandwidth applications such as voice over IP (Voice over Internet Protocol), video conferencing and other hosted applications, the disparity between the speeds is more of a challenge. Users requiring high speed uploads must purchase a more expensive package to get access to the faster upload speeds, even if the download speed of a less expensive option is acceptable.

David Spears, CEO of Genisys Global, a Wilmington-based provider of Internet-based solutions to businesses, said he agrees with the premise that local Internet is more expensive.

“Yes, the cost is higher here,” said Spears. “You have less population   to cover oversubscription.”

For symmetrical bandwidth products such as T1, “pricing is still very expensive. For a dedicated T1 you are looking at $600 to $700 per month,” said Spears.

Jeff Ritchie, IT director of Capitol Broadcasting, the parent company of Sunrise Broadcasting, also citied anecdotal evidence that prices are higher in Wilmington even compared to Raleigh.

Ritchie explained that Capitol Broadcasting utilizes a wide range of Internet connections from a variety of carriers. Ritchie offered an example from his business: for a point-to-point connection that does not include Internet access, “a 10 mb pipe is $1,400 per month in Wilmington and $800 in Raleigh because there is competitive process and facilities to support both locations.”

Ritchie explained that the initial installation of the fiber optic cable at the locations is included in the monthly price.

“When I go to renew that it will go down. I am paying for the install,” said Ritchie. “You always want to be the second business going into a building.”

Larger organizations such as PPD are able to get comparable prices in Wilmington because they buy in bulk. Ned Glascock, associate director of Public Affairs at PPD, said in an email that “as a contract research organization with global presence, PPD approaches Internet connectivity quite literally from a global perspective. In the United States, for instance, our scope allows us to enter into national contracts that deliver the same rates across our core U.S. locations.”

Spears said Wilmington has limited options for Internet connectivity: “We only have two primary vendors, AT&T and Time Warner. I see Windstream really growing and offering new products. The bigger they get, the better the pricing will get.”

ITC Deltacom, another local provider, was purchased by Earthlink in 2010 and still provides connectivity for some local businesses under that brand.

When asked for a comment on the results of the Bandwidth.com report, Time Warner Cable’s Communications Manager Andi Curtis responded: “We really don’t know the tools and resources (of the report), so we can’t comment on the results.”

Curtis also would not provide price quotes comparing the cost of bandwidth in Wilmington to other regions of the country or state.

“We do not give out our rates for competitive reasons,” said Curtis. “We work with businesses of all sizes and customize the products to meet their needs. Our prices are consistent across the Carolinas.”

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