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Should Japan and South Korea define the models for DSL competition? We think not. With value-added DSL services still nascent it's trial and error for operators all over the world at the moment.
Like so many things in life they will find it comes down to balance: the winners will be those who can capture it through achieving scale and market share, while staying well away from bargain basement pricing.
The effect of manic competition in Japan and South Korea is excellent service offerings at crazy prices, down to less than 10 Euros per Mbit/s, as operators fight to gain the market share they need to make their business case work. The cost structure in Asia Pacific may be different from Europe and North America, but it's highly unlikely it can support such price cuts.
Leaving aside the major cultural and infrastructure differences, which have played their part in Asia's DSL growth, a pricing strategy based on giving away bandwidth and services is fundamentally flawed.
Operators in other countries must be careful not to fall into the same trap as their Asian counterparts, and yet evidence suggests that as competition takes hold some are in danger of doing exactly that. In the US for example, where DSL operators are under increasing pressure from cable players, not only are prices dropping, but enticements such as free advanced ISP services and home networking are also being offered.
Such advanced services were supposed to be the first of the value-add proposition that would allow operators to generate additional revenues - hard to do when they are offered for free. If the collapse of the high-tech bubble showed anything it was that offering multiple "free services" was a slippery slope for all players.
Hence many operators in Europe have adopted a different strategy of creating a tiered service offering in order to try and differentiate their DSL services and put a brake on commoditisation. This has led to rather complex tariff structures in some cases.
Charging different amounts to different types of broadband users is a good idea, especially as operators start to target second-wave, less tech-savvy users. But - and it's a big but - it has to be done right. For example, linking speeds to lifestyles and user types (such as gamers) and not overloading customers with kbps/Mbps tech speak. In other words (sigh), finding the balance.
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