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July 03, 2014

Moving the Needle on High Speed Access Requires Scale



By Gary Kim
Contributing Editor



Current national reports about the state of high speed access in the U.S. market always lag developments on the ground by some measure. But national reports will diverge from current reality even more at times of rapid change.

In June 2013, there were 70 million U.S. fixed and 93 million mobile connections with download speeds at or above 3 Mbps and upload speeds at or above 768 kbps, according to the Federal Communications Commission.

At the same time, Verizon (News - Alert) has introduced 500 Mbps Internet access across its FiOS (News - Alert) service territory, while Comcast has introduced 500 Mbps Internet access in several major markets, including Chicago, Atlanta and Miami.

Suddenlink is introducing 300 Mbps service in a couple of its Texas markets.

Google (News - Alert) Fiber and a handful of independent Internet service providers are selling gigabit access service in a growing number of U.S. cities or towns.

There are important qualifiers. In many cases, the 300 Mbps or 500 Mbps services are pricey, costing triple digits per month.

Google Fiber and many independent ISPs are attacking retail prices by selling gigabit connections for $70 to $80 a month.

Suddenlink is pricing its 300 Mbps services at $65 a month, purchased either as a stand-alone product or as part of a bundle.

Those price points are significant. It is one thing to make very-fast services available to buyers. It is quite another thing to offer those services at compelling price points for most consumers.

As has been the case in the past, when 50 Mbps or 100 Mbps services were priced at triple digits per month, actual purchasing will be relatively low. Both widespread availability and attractive prices are required to move the needle on actual adoption.

The other issue is scale. No matter how fast and how affordable services sold by smaller ISPs might be, even high rates of adoption have little effect on national statistics.

It takes widespread availability, and attractive pricing, by the largest suppliers, to meaningfully change national statistics.

That isn’t to disparage the important contributions smaller ISPs are making. But big changes in access markets require widespread action by the suppliers who serve most of the market.

We aren’t going to see big changes in national experienced speeds until the biggest suppliers widely make available faster services, at the new price points being established by Google Fiber and others. 




Edited by Maurice Nagle
 
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