Why Bandwidth Pricing Varies Based on Location

With increased accessibility to the internet over the past two decades, the internet has become vital to nearly every aspect of our lives, including how we communicate, how businesses operate, how money is exchanged, and more.

But if it’s such a necessity, why is it so expensive? Why are some internet costs higher than others? And why do certain internet plans charge more? 

Bandwidth is expensive because of the many factors that go into providing it for customers:

• High-speed internet must be brought from the ISP to your location.
• Cables must be installed into the ground to the service location for local access. 
• Skilled laborers must be hired to maintain the system.
• Network backbone infrastructure needs to be built to interconnect the local, regional, and national markets.
• The network must be upgraded when the ISP reaches its capacity. 

In this blog post, we hope to help you gain a better understanding of bandwidth pricing as well as the solution to overcome higher prices.

What accounts for bandwidth pricing?

When selecting an internet service, business consumers can choose from two very different types of bandwidth:

• Dedicated internet, which is sometimes referred to as DIA, or dedicated internet access 
• Broadband internet, which is a shared resource 

Dedicated vs. Shared Bandwidth

DIA costs more because the bandwidth is guaranteed to the customer. In other words, if the customer buys 100Mb, they are guaranteed to get 100Mb down and 100Mb up through a service-level agreement (SLA). 

Broadband internet tends to be less expensive because it is a shared resource where the business park and geographic area shares the overall bandwidth. In other words, a business buys service up to 100Mb, and the speed fluctuates based upon how much other businesses are using in that area at that time.

Technology Quality

Technology also accounts for a significant portion of the cost:

• Fiber-optic internet, commonly referred to as “fiber” or “fiber internet,” is used in both dedicated and broadband solutions. It has low lag time and can reach speeds of up to 940 Mbps.
• Cable internet is also a premium technology that provides a signal sent through coaxial wires. 

Other technologies are also available, such as fixed wireless, DSL, T1, and more. The costs of those technologies are different, depending upon if they are for DIA or broadband use.

Carrier Availability

Finally, a solution provider will sometimes need to either buy or lease access from another carrier to get to a particular building. Those costs are wrapped into the overall cost of the service.

How is bandwidth calculated? 

The cost or calculation of bandwidth prices is based primarily on three key factors:

• Technology
• Type of service (dedicated vs broadband)
• Distance 

1. Technology

When it comes to technology, fiber internet tends to be more expensive because it is equipped to handle more bandwidth. On the other hand, while some cable internet plans can reach up to 1,000 Mbps, cable still has asymmetrical speeds, which means it has more download bandwidth than upload bandwidth. 

2. Type of Service

DIA is a service dedicated to one customer, and broadband is a service shared between multiple users. For this reason, broadband is a popular selection because the price is shared across so many users. That said, some businesses need DIA because they require guaranteed bandwidth to make sure their applications run correctly and are not susceptible to how much others in the area are downloading at the moment.

3. Distance

The other aspect of price is distance. This price includes the distance that the line is run under the ground to get to the building that requires service. It also accounts for how far the antenna signal needs to travel to reach a rooftop. 

Locate bandwidth with ease.

As you have read, there are many factors that go into bandwidth pricing. To find the best bandwidth service package, utilize a tool, such as BandwidthFinder, that gives you access to a database of providers that provide DIA or broadband services, as well as different types of technology. When you combine BandwidthFinder with MasterStream service, you can have access to bandwidth pricing information. 

Want to learn more about locating bandwidth? Download our BandwidthFinder checklist today!