“We just don’t see the need of delivering [gigabit broadband] to consumers.” — Irene Esteves, former chief financial officer, Time Warner Cable, February 2013

“For some, the discussion about the broadband Internet seems to begin and end on the issue of ‘gigabit’ access. The issue with such speed is really more about demand than supply. Most websites can’t deliver content as fast as current networks move, and most U.S. homes have routers that can’t support the speed already available.” — David Cohen, chief lobbyist, Comcast Corp., May 2013

“We don’t focus on megabits, we don’t focus on gigabits, we focus on activities. We go to the activity set to get a sense of what customers are actually doing and the majority of our customers fit into that 6Mbps or less category.” — Maggie Wilderotter, CEO, Frontier Communications, May 2013

“It would cost multiple billions” to upgrade Cox’s network to offer gigabit speeds to all its customers. — Pat Esser, CEO, Cox Communications, Pat Esser, chief executive of Cox Communications Inc., January 2013

“The problem with [matching Google Fiber speeds] is even if you build the last mile access plant to [offer gigabit speeds], there is neither the applications that require that nor a broader Internet backbone and servers delivering at that speed. It ends up being more about publicity and bragging. There has been a whole series of articles in the paper about ‘I’m a little startup business and boy it is really great I can get this’ and my reaction is we already have plant there that can deliver whatever it is they are talking about in those articles, which is usually not stuff that requires that high-speed.” — Glenn Britt, CEO, Time Warner Cable, December 2012

“Residential customers, at this time, do not need the bandwidth offered with dedicated fiber – however, Bright House has led the industry in comprehensively deploying next-generation bandwidth services (DOCSIS 3.0) to its entire footprint in Florida – current speeds offered are 50Mbps with the ability to offer much higher. We provision our network according to our customers’ needs.” – Don Forbes, Bright House Networks, February 2011

‘Charter [Cable] is not seeing enough demand to warrant extending fiber to small and medium-sized businesses — and certainly not to every household.’ — “Speedier Internet Rivals Push Past Cable“, New York Times, Jan. 2, 2013

Unless you live in Kansas City, Austin, in a community where public broadband exists, or where Verizon FiOS provides its fiber optic service, chances are your broadband speeds are not growing much, but are getting more expensive. The only thing innovative coming from the local phone or cable company is a constant effort to convince customers they don’t need faster Internet access anyway.

At least until a competitor threatens to shake up the comfortable status quo.

Time Warner Cable claims they are perfectly comfortable offering residential customers no better than 50/5Mbps, except in markets like Kansas City (and soon in Texas) where 100Mbps is more satisfying. Why is a glass Time Warner claims is full to the brim everywhere else in the country only half-full in Kansas City? Google Fiber might be the answer. It offers 1,000/1,000Mbps service for less money than Time Warner used to charge for 50Mbps service, and Google is also headed to Austin.

AT&T scoffed at following Verizon into the world of fiber optic broadband, where broadband speeds are limited only by the possibilities. Instead, they built their half-fiber, half-Alexander Graham Bell-era copper wire hybrid network on the cheap and ended up with broadband speeds topping out around 24Mbps, at least in a perfect AT&T world, assuming everything was ideal between your home and their central office.

At the time U-verse was first breaking ground, cable broadband’s “good enough for you” top Internet speed was typically 10-20Mbps. Now that incrementally faster cable Internet speeds are available from recent DOCSIS 3.0 cable upgrades, AT&T is coming back with an incremental upgrade of its own, to deliver around 75Mbps.

It is still slower than cable, but AT&T thinks it is fast enough for their customers, except in Austin, where Google Fiber provoked the company to claim it would build its own 1,000Mbps fiber network to compete (if it got everything on its Christmas Wish List from federal, state, and local governments).

Are you starting to see a trend here? Competition can turn providers’ investment frowns upside down and get customers faster Internet access.

Wilderotter: Most of our customers are satisfied with 6Mbps broadband.

In rural markets were Frontier Communications faces far less competition from well-heeled cable companies, the company can claim it doesn’t believe most of its customers need north of 6Mbps to do important things on the Internet. If they did, where would they go to do them?

Where Comcast and AT&T directly compete, major Internet speed increases are a matter of “why bother – who needs them.” Comcast is more generous where it faces down Verizon FiOS. AT&T also knows the clock is ticking where Google Fiber is coming to town.

Verizon FiOS, Google Fiber, and a number of community-owned fiber to the home broadband networks like EPB in Chattanooga and Greenlight in Wilson, N.C. seem more interested in boosting speeds to build market share, increase revenue to cover their expenses, and make a marketing point their networks are superior. They respond to requests for speed upgrades differently — “why not?”

Verizon figured out offering 50/25Mbps service was simple to offer and easy to embrace. Two clicks on a FiOS remote control and $10 more a month gets a major speed upgrade for basic Internet customers that used to get 15/5Mbps service. Verizon management reports they are pleased with the number of customers signing up.

In Chattanooga, Tenn. EPB Fiber offered gigabit Internet service because, in the words of its managing director, “it could.” The community-owned utility did not even know how to price residential gigabit service when it first went on offer, but the costs to EPB to offer those speeds are considerably lower over fiber to the home broadband infrastructure.

Broadband customers in Chattanooga, Kansas City and Austin are not too different from customers in Knoxville, Des Moines, and Houston. But the available broadband speeds in those cities sure are.

LUS Fiber in Lafayette, La. changed the song Cox was singing about their ‘adequate’ broadband speeds. Earlier this year, Cox unveiled up to 150/25Mbps service to cut the number of departing customers headed to the community owned utility, already offering those speeds.

Convincing Wall Street that spending money to upgrade networks to next generation technology will earn more money in the long run has failed miserably as a strategy.

“Competitors have been overbuilding, investors are wondering where the returns are,” said Mark Ansboury, president and co-founder of GigaBit Squared. “What you’re seeing is an entrenchment, companies leveraging what they already have in play.”

With North American broadband prices rising, and some cable companies earning 90-95% margins selling broadband, one might think there is plenty of money available to spend on broadband upgrades. Instead, investors are receiving increased dividend payouts, executive compensation packages are swelling as a reward for maximizing shareholder value, and many companies are buying back their stock, refinancing or paying off debt instead of pouring money into major network upgrades.

That is not true in Europe, where providers are making headlines with major network improvements and speed increases, all while charging much less than what North Americans pay for broadband service.

UPC Netherlands is Holland’s second biggest cable company and is in the middle of a broadband speed war with fiber to the home providers.

In the Netherlands, the very concept of Google Fiber’s affordable gigabit speeds terrify cable operators like UPC Netherlands, especially when existing fiber to the home providers in the country are taking Google’s cue and advertising gigabit service themselves. UPC rushed to dedicate up to 16 bonded cable channels to boost cable broadband speeds to 500Mbps in recent field trials, without giving any serious thought to the cable operators in the United States that argue customers don’t need or want the faster Internet speeds fiber offers.

“We had to address it head on very recently because of the fiber (competition)” said vice president of technology Bill Warga. “The company is called Reggefiber in the Netherlands. What they’re touting is a 1Gbps service, [the same speed] upstream and downstream. We came out with 500Mbps service. We had to build a special modem because (DOCSIS) 3.1 chips aren’t out yet. We had to double up on the chips in the modem and put it out there because we had to have a competing product, if anything just in the press. That was a reaction but that tells you how quickly in a marketplace that something can move.”

Despite that, groupthink among cable industry attendees back home at the SCTE Rocky Mountain Chapter Symposium agreed that Google Fiber was a political and marketing stunt, “since the majority of users don’t need those types of speed.”

Who does need and want 500Mbps? Executives at UPC, who have it installed in their homes, admits Warga. But cost can also impact consumer demand. Currently, the most popular legacy UPC broadband package offers 25Mbps for €25 ($32.50). The company now sells 60/6Mbps for €52,50 ($48.75), 100/10Mbps for €42,50 ($55.25) or 150-200/10Mbps for €52,50 ($68.25).

Warga also admits the competition has put UPC in a speed race, and boosted speeds are coming fast and furious.

“They’ll come in and say they’re 100, or 101Mbps we’ll come back and say we’re 110 or 120, or 130Mbps,” Warga said. “It’s a bit of a cat and mouse game, but we always feel like we can be ahead. For us DOCSIS 3.1 can’t come soon enough.”

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The Wall Street Journal investigates why cable companies are getting stingy with broadband speed upgrades while gigabit fiber networks are springing up around the country. (4 minutes)

AT&T says government regulations have hampered the company’s plans to roll out faster broadband networks to areas where consumers and businesses want faster speeds.

Now that Google has gotten permission to roll out its gigabit fiber network only to neighborhoods that show an interest in the service, AT&T says it should be allowed to operate the same way.

CEO Randall Stephenson told investors at a J.P. Morgan investor conference in Boston that AT&T would like to build fiber networks, but government requirements that it offer the service universally across the communities it serves has made such networks financially unprofitable. Eliminating those rules would create a new incentive for fiber upgrades in areas that want them.

“I think you are going to see that begin to manifest itself around the United States, and in not just AT&T and Google,” Stephenson said. “You will see others doing this because the demand for really high-speed broadband via gigabit-type fiber-based solutions on a targeted basis is going to be very, very high.”

AT&T says Google has already changed how future broadband networks are deployed — only to areas where there is enough demand for the service. Google’s entry into Kansas City came with a pre-registration procedure that allowed the company to gauge demand for its fiber network. The neighborhoods expressing the most interest were given priority during the network buildout. Google also won the right to entirely bypass neighborhoods where an insufficient number of residents expressed interest in the service.

Stephenson

Traditionally, cable and phone companies constructing networks like FiOS, U-verse, and similar fiber deployments are required to offer service throughout each community. The only general exception relates to sparsely populated or very high cost areas that have an insufficient number of potential customers, making return on investment difficult. Google can bypass even the most densely populated sections of downtown Kansas City if there is insufficient demand for its service. Cable and phone providers who attempted this in the past would have been accused of “redlining” — singling out only the most lucrative, affluent service areas while bypassing low-income neighborhoods.

Now AT&T hopes Google has established a precedent it can use to cherry-pick network upgrades of its own.

“The key is being able to do it in places where you know there is going to be high demand and people willing to pay the premium for those type services,” Stephenson said, predicting in some parts of Austin, AT&T could achieve a 35 percent market share for its promised fiber network.

Stephenson also suggested an unlikely new source of money to finance fiber upgrades — content producers and applications developers who need faster networks to support sales of their online products and services. That would shift the economics of faster broadband to an entire new model — broadband providers may decide their current networks are fast enough and might avoid upgrading them without some financial compensation from the websites and content producers customers visit.

A freak spring snowstorm has stolen CenturyLink’s thunder.

A freak spring snowstorm has covered up much of the anticipated publicity for CenturyLink’s plans to launch a trial of gigabit fiber broadband for 48,000 customers in western Omaha.

The phone company announced the pilot project this week amid a historic spring storm that dumped several inches of heavy, wet snow on parts of Nebraska. The media devoted most of its attention to the weather.

CenturyLink admits its gigabit fiber service is a pilot project designed to test consumer demand and the tolerance of local officials for limiting upgrades to selected neighborhoods and customers most likely to buy the service. CenturyLink has priced the gigabit service comparably to Google Fiber — $79.95 a month if bundled with other CenturyLink products. Standalone broadband is nearly twice as expensive — $149.95 a month.

“CenturyLink is pleased to offer its Omaha customers ultra-fast broadband speeds up to 1Gbps to help keep pace with growing broadband demands,” said Karen Puckett, chief operating officer. “This demonstrates our commitment to deliver communications solutions that provide our customers with the technology they need to enhance their quality of life, now and into the future.”

CenturyLink will not be building the fiber network from scratch. The company already runs a 100Gbps middle-mile/institutional fiber network in Omaha that reaches certain business clients and serves as a conduit for CenturyLink customer traffic. CenturyLink will supplement that by using the remnants of its predecessor’s long-gone Qwest Choice TV service. The company will spend millions to run fiber connections to homes and businesses, but around 9,800 residents formerly served by Qwest’s television service will be able to sign up for CenturyLink Lightspeed Broadband as early as Monday. Others may have to wait until as late as October.

CenturyLink now sells up to 40Mbps speeds in Omaha, with a 300GB monthly usage cap. The company has not said if it intends to apply a usage limit on its fiber customers.

The phone company’s largest and fastest competitor is Cox Cable, which sells up to 150/20Mbps service for $99.99 a month.

Cox Cable cannot match CenturyLink’s speeds at the moment, but does not think most Omaha residents need or want gigabit fiber.

“It is important to note that our most popular Internet package remains the one that provides speeds of 25Mbps, which meets the needs of the majority of customers,” said Cox spokesman Todd Smith. “We will continue to talk with our customers and invest in product enhancements to provide an optimal broadband experience.”

Only around 12% of metropolitan Omaha will have access to the experimental fiber service, primarily those living in West Omaha. The network will bypass residents that live further east. The boundaries of the forthcoming fiber network are notable: West Omaha comprises mostly affluent middle and upper class professionals and is one of the wealthiest areas in the metropolitan region. Winning a right to offer service on a limited basis within Omaha is an important consideration for telecom companies like CenturyLink.

AT&T, Verizon, CenturyLink and other telecommunications companies are seeking deregulation that would end universal service mandates that require companies to build their networks in every neighborhood, rich and poor.

Cable and telephone companies have taken careful note Google Fiber is being allowed to provide service only where demand can be found — a significant change in long-standing municipal policies that demand cable and phone companies provide access to nearly every resident.

CenturyLink delivered a “between the lines” message to local officials when it suggested it might expand its fiber network elsewhere in Omaha and beyond, but only after evaluating the project for “positive community support, competitive parity in the marketplace and the ability to earn a reasonable return on its investment.”

In other words, keeping zoning and permit battles (and residential complaints about construction projects) to a bare minimum, allowing the company the right to choose where it will (and won’t) deploy service, and making sure people will actually buy the service are all the key factors for fiber expansion.

AT&T said much the same thing when it vaguely promised a gigabit fiber network to compete with Google in Austin.

Google may have unintentionally handed their competitors a new carrot: deregulate us in return for fancy fiber upgrades that customers crave.

In perspective: CenturyLink’s fiber trial will only impact about 12% of the total population of metropolitan Omaha, primarily in and near affluent West Omaha.

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WOWT in Omaha spent less than a minute reporting on CenturyLink’s forthcoming gigabit fiber trial. A spring snowstorm preoccupied most of Omaha’s media instead.  (1 minute)

To many, Provo, Utah might seem an unusual choice to follow on the heels of Google’s earlier announcement its gigabit fiber network was headed to Austin, Tex.

Provo is only the third largest community in Utah — Salt Lake City and West Valley City are bigger — and the community already has a fiber network called iProvo. So why build another one?

Google won’t have to.

But first some background:

iProvo was envisioned a decade ago as a public-private partnership — a fiber to the home network owned by the public with private service providers using it to sell broadband and other services . iProvo taught an early lesson about municipal broadband — large cable and phone companies routinely boycott participation in any network they do not own and control themselves.

In 2003, the president of Qwest’s Utah division made clear their intentions: “Fiber optic’s capabilities are way more than what most consumers need in their homes. Why provide a Rolls Royce when a Chevrolet will do?”

Comcast, the dominant local cable operator, also “went ballistic” according to former mayor Lewis Billings.

iProvo can be yours for just $1.

“One hired a PR firm and a telemarketing company to make calls to citizens,” Billings recalled. “They also placed full-page ads and ultimately hired people to picket City Hall. It was a bruising fight.  My favorite picket sign had a piece of telephone wire taped to it and read that I and one of my key staff members were, ‘a Twisted Pair.’”

With both Qwest and Comcast wanting nothing to do with the project, smaller independent ISPs had to fill the gap. It was a difficult sell, particularly because Qwest and Comcast blanketed Provo residents with a misinformation campaign about the network and pitched highly aggressive retention offers to keep customers with the phone and cable company. iProvo has been in financial distress ever since.

Former Provo city councilwoman Cynthia Dayton remembers being on the council when iProvo was approved and believes the public-private network was a decade before its time.

“Ten years ago it was worth the vote on iProvo,” she told the Daily Herald. It was one of the most difficult decisions but it was for the future.”

More than a year ago, Google noticed the city of Provo issued a request for proposals on what to ultimately do with iProvo.

Google became interested because Provo is seen as a city with hundreds of technology start-up companies and maintains a vibrant tech hub. The city also ranked highly for the enormous value it places on connectivity and community — something the approval and construction of iProvo demonstrated.

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Why Provo? Google considers the city’s rankings. (1 minute)

City officials and Google executives began quietly talking more than a year ago about Google buying the public-private network. A key selling point: the city was willing to let the operation go for a steal — just $1.00. In return, Google promised to invest in and upgrade the network to reach the two-thirds of Provo homes it does not reach. Google says iProvo will need technology upgrades in the office, but the existing fiber strands already running throughout the city are service-ready today.

Val Hale, President of the Utah Valley Chamber of Commerce, said a quick “back of the envelope” estimate put Google’s anticipated investment in iProvo network upgrades at $18 million, according to the Deseret News. Unfortunately, taxpayers will still need to pay off about $40 million in bonds the city accumulated for iProvo’s initial construction costs.

Curtis

Current Mayor John Curtis says he has made the best out of a difficult situation.

“We have maximized what we have here today,” said Curtis. “It’s about maximizing what we have. I believe in the long-term it will pay dividends many times greater than what we paid into it, but it’s going to take a while to realize that dream.”

Google promised free gigabit Internet service to 25 local public institutions including schools, hospitals, and libraries. Residential customers will be expected to pay $70 a month for 1,000Mbps service or get 5Mbps broadband service for free up to seven years.

Google’s investment in Provo is anticipated to be far lower than in Austin and Kansas City — cities where it needs to build a considerable amount of fiber infrastructure from scratch. With existing fiber already in place in Provo, Google’s gigabit service will be available by the end of this year, at least six months faster than in Austin.

With reduced construction costs, Google will only ask new customers for a $30 activation fee, far less than the $300 Google will ask Austin and Kansas City residents to pay if they do not sign a multi-year service contract or only want basic 5Mbps service.

Google sees the opportunity to use its fiber network in an ongoing effort to embarrass other broadband providers into investing in speed upgrades.

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KSL in Salt Lake City reports Google Fiber is coming to Provo. Last year Google began talking with the city to acquire its iProvo municipal fiber network.  (3 minutes)

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KSTU in Salt Lake City reports taxpayers are still on the hook for around $40 million in bond payments to cover the construction costs of iProvo. But Google Fiber will stop other Internet providers from “cheating everyone” says one local Provo resident.  “[Other ISPs] give you the slowest connection possible and charge you a ridiculous amount for it,” said Haley Cano. (4 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KTVX Salt Lake City Google Fiber in Provo 4-17-13.mp4[/flv]

KTVX in Salt Lake had some trouble navigating the difference between a gigabit and a gigabyte, and confused what Google services will be sold and which will be available for free in this report, but the ABC affiliate covered the unveiling with both city and Google company officials on hand.  (2 minutes)

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This morning, KTVX did a better job in this interview with the mayor of Provo and Google’s Matt Dunne, who says Google believes speed matters and current ISPs simply don’t offer enough.  A key factor to attract Google’s interest is a close working relationship with the cities that want the service. (2 minutes)

Provo, Utah will be the third city in the country to get Google’s gigabit fiber network, in part because fiber infrastructure installed by a defunct provider that ran into money problems is now likely available for Google’s use.

The announcement came from Provo Mayor John Curtis this afternoon.

The choice of Provo was a surprise even to area residents, who speculated the “epic announcement” promised by Provo’s deputy mayor Corey Norman involved the opening of a new Popeye’s Chicken location or a second Red Lobster headed to town. Instead, it is only 1,000/1,000Mbps broadband for a likely price of $70 a month.

Provo’s existing fiber infrastructure, now owned by the local government, was likely a major reason in selecting the city of 115,000 for a Google-style upgrade.

The announcement came a little over a week after Google announced Austin, Tex. as the second stop for Google’s fiber upgrade. The surprise announcement may create waves in the telecom industry that earlier assumed Google was only interested in developing a demonstration project in Kansas City. It is now likely Google has bigger plans than that.

Communities that own, control, or manage their own fiber networks — institutional or available to the public — may be the next to be courted by Google.

Google will face off against Comcast Cable and CenturyLink (formerly Qwest) in the city.

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KTVX in Salt Lake City reports Provo is getting ready for “an epic announcement.” It turns out Google’s gigabit fiber network is coming to the city of 115,000.  (2 minutes)