The NY Times has a good article about how high prices are stifling “broadband” adoption, following AOL’s announcement of its approach to broadband.
Apparently it’s doubtful that any providers can make money at $40 to $55/month in charges to the user:
[AOL] has developed a new approach to these deals that includes the brand of the network provider along with AOL’s. That makes things clearer for consumers and less of a threat to the cable and phone companies.
In the first of those deals, with Comcast, AOL will price the bundled service at $55 a month, $6 less than the combined price of Comcast’s broadband service and AOL’s bring-your-own-access plan.
Still, that is about $10 a month more than other providers are charging. That premium is how AOL actually makes a profit on its broadband service when Earthlink loses money charging $42 to $50 a month.
Clearly the access monopolies (cable and ILEC’s) are raking it it at these rates. Their profits are near 100% because their costs are near zero. AOL and Earthlink can’t sell broadband access because they don’t own any.