Comcast announced last week that they are going to start offering symmetrical 2 gigabit data speeds in Atlanta and that over the next year they will offer this to as many as 18 million subscribers. The announcement also said that Comcast would have a 1 gigabit product rolled out to most of its markets sometime in 2016.
The announcement says that customers have to be “within close proximity to Comcast’s fiber network’” to get the product. And by that, they mean you basically must be living directly next to an existing fiber line. It’s hard to foresee Comcast building a lot of fiber to service residences, even at the expected high price of this product. For them to build fiber to those 18 million would cost a lot more than what Verizon spent to build FiOS, and they are extremely unlikely ever to do that.
I subscribe to Comcast’s Blast service and get 50 Mbps download speed for a listed price of $50 per month. They also offer a 105 Mbps product for $80 per month in my market. In some markets there is a Blast product that can deliver 505 Mbps and which costs $400 per month. But Comcast doesn’t sell naked cable modems above 25 Mbps and the Blast products all require a bundle with a cable TV product. The smallest cable package is about $15 per month and includes HBO and local channels. There are extra fees for the cable modem and the settop box. Plus there are a few of the mystery fees I’ve discussed in this blog like a ‘local programming charge’. I don’t own a TV and so the cable I buy is a throwaway just so I can get the faster data speed. My $50 cable broadband actually costs me nearly $80 per month.
They aren’t going to announce the gigabit pricing until May, but with their existing half gigabit product costing $400 per month this is not likely to be cheap, except perhaps in neighborhoods where they are going to compete directly with Google or somebody else with a very fast product.
The announcement says that a customer must allow the installation of professional grade equipment. This means it is likely that a customer on this service is going to get the same termination router that is given to business customers who already subscribe to Comcast’s ‘Gigabit Pro’ product.
I am going to guess that initially this is only going to be available to a relatively tiny number of customers. Comcast has been decreasing the size of their fiber nodes over the last decade, so they probably have fiber within a few miles of most homes. But those networks have not been built in most cases with enough fiber pairs to be able to support widespread FTTP. I live in an upscale neighborhood but I am over a mile from the closest fiber I can find. I don’t know if it belongs to Comcast or CenturyLink, but I find it totally unlikely that Comcast would build that last mile to give me this product, particularly in a residential neighborhood.
And even though the cable network in my town is relatively new and was largely rebuilt a decade ago after hurricane Charley leveled this area, we still don’t have access to the 505 Mbps product (nor would many here likely pony up $400 per month for it).
I am the last one to be negative about anybody who brings fast data speeds to customers, and I am sure that there will be some households that will buy the new product. But unless the pricing is made cheap enough to compete with Google, it’s going to be extremely unlikely that anybody who is not running a somewhat significant business out of their home is going to pay the likely high price of the product.
I’ve heard that CenturyLink’s residential gigabit product is priced at about $150 and I would probably pay that much for it if it was available (are you listening CenturyLink?) After all, I have been a broadband advocate for fifteen years or so and I doubt I could say no to a gigabit. But if Comcast’s product is priced in line with their half gigabit product, then even I would have to pass on it. A 2 gigabit bandwidth product in my home would give me great bragging rights, but unless I hit the lottery it’s likely going to be out of my price range.
Unless Comcast really fools me, this announcement is more fluff than reality. For Comcast to really get fiber past every home would cost them many billions of dollars, and I don’t know why they would do that when they already have a migration path on their coax to get to gigabit speeds. It’s just unfathomable that they would invest in an expensive new network to compete with their own existing expensive network.
See my blog posts from last August blasting CenturyLink’s announcement that Denver would soon be a “Gigabit City’ as 1990’s pump n dump marketing fluff. Fast forward 9 months and the horizontal boring machines are making their way through my neighborhood, there are white utility spray paint markings in the alley and a big roll of fiber is hanging off the utility pole at the end of the alley waiting to be rolled to my house. I expect CenturyLink to offer me gigabit service at $150/month sometime very soon and I will take it.
Eventually. big service providers will not only have to compete with each other to offer gigabit speeds, but it will be the “must offer” service to please Wall Street investors.
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There are many Local Franchising Authorities (counties and towns) that have been getting free Comcast fiber to connect their public buildings and schools. Many of those franchises are under negotiation for renewal, and others soon to do the same. It wouldn’t take much for Comcast to refuse to extend the current fiber agreements, and take back the fiber already installed as a backbone to many school neighborhoods and downtown areas.
We’ve already been seeing this for a few years already. There are cities where there is now a second certified cable provider such as Verizon FiOS that has led Comcast to declare that they are no longer responsible for requirements such as providing a free government intranet. I’ve seen Comcast come back in some jurisdictions and ask for huge monthly payments for what was once offered free. You are right and this is one of the flip-side consequences of competition.