Electronics gadgets lose their value in dizzying fashion—last year's slick new laptop is eclipsed by this year's model, which is cheaper even as it packs in more features. But the pattern doesn't seem to hold for broadband access. Or does it?

The truth is, no one really knows. Good, industry-wide data on ISP pricing is tough to get hold of, but one group of researchers at Northwestern University did their best by using data gleaned from 1,500 cable and DSL contracts. Economist Shane Greenstein and grad student Ryan McDevitt poured over the data set to find out what happened to broadband pricing between 2004 and 2009, and they concluded that quality-adjusted priced declines were minimal, in some cases nonexistent.

Speeds went up, as any broadband user could tell you, but prices largely held steady—almost as though ISPs decided to compete on speeds and features but leave price alone. In fact, this is exactly what Greenstein suspects, though he can't prove it.

Speaking to Northwestern's faculty research magazine, Greenstein pointed to the limited competition found in many broadband markets and asked rhetorically, "So if you were in such a market as a supplier, why would you initiate a price war?... Like many observers, I expected to see prices drop by now, and I am surprised they have not."

That last comments isn't quite accurate—prices have dropped a little. Greenstein's working paper (PDF) on the subject (which has not been peer-reviewed) is called "Evidence of a Modest Price Decline in US Broadband services."

According to his findings, "Our evidence points towards, at most, a total modest decline in broadband prices after adoption. We place the price decline at, perhaps, as much as 10 percent decline in quality adjusted prices over a bit more than five years, or under 2 percent a year in nominal terms. In real terms, however, the declines become more substantial, at nearly 5 percent per year. A lack of data about market share makes it impossible for us to say more with much precision."

Greenstein's analysis says nothing about the causes behind ISP pricing, but the paper does say that "the lack of any dramatic price decline in broadband rejects any claim that US policy results in dramatic quality-adjusted price declines in broadband services."

That might sounds like a veiled suggestion that the US wireline duopoly isn't a great mechanism to reduce the price of broadband, and it is. Greenstein later notes that "US policy delegated discretion over broadband investment to private firms, under the assumption that private firms faced strong incentives to invest and improve the infrastructure. Price indices can, and should, play a major role in assessing such policies. Such indices measure improvements in competitive performance in markets with few suppliers, as in broadband."

Greenstein's construction of just such a price index tells him that the market isn't functioning as well as it might, though the fact that prices decline in the face of inflation shows that things are moving in the right direction. With different policies, they could be moving faster, however.