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My take right now.. is a little while. There will always be some providers pushing the envelope of course, but I just don't see the fundamentals getting down to sub-$1 any time in the near future. There simply is not enough traffic out there to make it attractive to companies to compete for yet.
What price drops take basically, is an increase in overall traffic, as well as networking equipment to reach the realm of affordability for that new "baseline" level of traffic.
Essentially, if you can come to a provider and say "I will pay 50% of my current per-unit bandwidth costs now, but I will commit to so much that my total bill will be a net increase of 30%" you will start seeing prices drop rapidly again. When a sales department of a major company can show an increase in total revenue - it's a hell of a lot easier to get signoffs approved on those deals, than simply "trying to keep a customer". And I'm talking the Tier1 type of providers - where it doesn't cost them "per megabit" so much, as it is more along the lines of "per lit wave" and "per network interface".
Currently - and I certainly have been wrong before - I don't see the above happening on a large scale.
But to illustrate. If you're currently paying $10/Mbit to a provider for 100Mbit, and make an offer to them of "I'll increase my usage to 1000Mbit, at $5/mbit" I think you will find many providers taking you up on that. Tweak the actual numbers however you will, but you get the idea. Coming to them and saying "I want my 100Mbit at $5/mbit" you will find much more resistance, as it's a net revenue loss vs. gain they can show on the balance sheet.
This ignores *many* more variables of course, and oversimplifies things. But in my experience now, I've seen the above rule of thumb hold fairly true through almost 10 years of being in the business. I don't see it changing fundamentally any time soon.
-Phil
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