Despite years of arguments from telecom companies that residential customers don’t need or want super-fast broadband speeds, the people of Kansas City think otherwise.

A survey by Wall Street analyst Bernstein Research discovered Google Fiber has signed up almost 75% of homes offered the gigabit fiber-to-the-home service.

“[Customer] penetration measured by our survey was much higher than we had expected,” said Berstein Research analyst Carlos Kirjner.

Haynes and Company conducted a door-to-door survey of more than 200 homes within Google Fiber’s service area in Kansas City, visiting wealthy, middle-income, and challenged urban areas. Despite claims from cable and phone companies that Google is only interested in choosing to offer fiber service in affluent areas, Bernstein Research found Google was doing very well in every neighborhood.

In the poorest neighborhoods, Google is still winning a 30% market share — way above estimates, with customers attracted to Google’s free 5/1Mbps broadband service (customers must pay a recently lowered $30 construction fee). Customer penetration rates in urban areas could grow even higher if Google allowed customers with free Internet service access to its $50 cable television package, now only available to gigabit broadband customers.

Google’s service plans

In middle and upper income neighborhoods, Google has decisively captured a 75% market share — clearly a major problem for incumbent competitors AT&T and Time Warner Cable, which could lose well over half their customers.

Even more worrying for the cable and phone companies, Google is grabbing customers primarily on word-of-mouth testimonials from satisfied customers. At least 98% of Kansas City residents surveyed were aware of Google’s fiber offering. At least 52% said they would “definitely or probably” buy Google Fiber, 25% said they might or might not purchase the service, and only 19% said they definitely or probably wouldn’t buy it.

“Our survey suggests that Google Fiber has gained a significant foothold in its early Kansas City fiberhoods. Consumers are highly satisfied with Google Fiber service, suggesting its share gains are likely not done yet,” Kirjner added.

Bernstein believes Google can grab an even larger share of the Kansas City market by returning to mature fiberhoods in the future with aggressive marketing campaigns that could easily win even more customers.

If Bernstein’s research holds true in other markets, Google Fiber could eventually become a serious competitive threat to both cable and telephone companies, depending on how quickly they expand. Google Fiber is also likely to become a profitable service for the search engine giant, despite the high initial expense of wiring communities for fiber optics.

Bernstein predicts that Google Fiber is positioned to capture a minimum of 50% of the Kansas City market within four years, knocking Time Warner Cable’s out of first place for the first time and posing a serious financial threat for AT&T’s less-capable U-verse platform, which has only attracted a minority share of the market. At least 40% of customers seeking a broadband and cable television package will choose Google Fiber, Bernstein Research predicts.

In almost every market, the traditional cable operator still maintains the largest share of customers. Telephone company competitors usually don’t win more than 20-30% of a market, although Verizon FiOS’ fiber network does better than most. Satellite providers only compete for television customers, which is increasingly less profitable than broadband service.

These kinds of results underline Bernstein Research’s conviction Google Fiber is not an experiment or publicity stunt that the cable industry often claims it to be. Nor does the research firm believe Google is only interested in forcing cable and phone companies to raise broadband speeds. Instead, it is becoming increasingly clear Google is prepared to gradually expand its fiber network across the country, at least in areas bypassed by Verizon FiOS or other fiber networks. However, it will take many years for this to happen.

Comcast customers in Philadelphia are organizing to stop the cable company from winning a 15-year franchise renewal to continue providing service in the city unless the cable operator changes its ways after years of rate increases and poor customer service.

CAP Comcast! argues Comcast is not paying its fair share and is not a good corporate citizen in the city.

“Comcast has outsized power in a Philadelphia still suffering under economic crisis,” says the group. While the company charges some of the highest cable rates in the country, it has successfully earned $64 billion in revenue and an extremely low corporate tax bill.

“During the last franchise negotiation, Philadelphia elected officials and appointed leaders secured important resources for our city, including funds for public access television, and about $17 million a year for Philadelphia’s general fund,” said Bryan Mercer, co-executive director at Media Mobilizing Project. “But since that time, Philadelphia has shuttered over 20 schools and slashed services that our communities need.  Comcast pays less than 4% in corporate tax revenue, in a state where the average is almost 10%. And they’re getting $40 million in subsidies for their new planned building. If Comcast wants a chance to profit from our communities, Philadelphia should ensure Comcast pays their fair share, or invite other communications companies to serve our city.”

Among the group’s key arguments:

CAP Comcast! is asking for a five-year rate freeze for Comcast services while increasing broadband speeds and access to all Philadelphians. It also seeks fair treatment for Public, Educational, and Government access channels, expanded affordable Internet access without pre-conditions, involvement in solving local community problems, support of worker rights, and an end to passing along the cost of the franchise fee to customers.

The group has a petition on its website.

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CAP Comcast! produced this video introducing its campaign to prevent another 15 year franchise for Comcast in Philadelphia unless the company changes its ways. (2:51)

Cox Communications Inc., the third-largest U.S. cable company, will offer gigabit broadband to residential customers later this year when it begins deploying DOCSIS 3.1 technology across its footprint.

“We’re working on our road map now to bring gigabit speeds to customers this year,” Pat Esser, the president and chief executive officer of Cox, said yesterday in an interview with Bloomberg Television’s Betty Liu at the Cable Show in Los Angeles. Cox customers have asked for faster speeds, he said.

The gigabit speed upgrade is a significant flip-flop for Cox Communications, which last year dismissed the demand for super-fast Internet speeds, suggested they were unnecessary for residential customers and too expensive to offer.

“It would cost multiple billions” to upgrade Cox’s network to offer gigabit speeds to all its customers, Esser said in January 2013. Now Esser tells Bloomberg the estimated cost is closer to “hundreds of millions of dollars to build.”

The leveling off of video subscriptions has made broadband a critical part of Cox’s ongoing business plan. Esser claims Cox will adapt its business network infrastructure to introduce gigabit service to residential customers in some cities.

Last November, Cox’s chief technology officer Kevin Hart told FierceCable’s Steve Donohue that DOCSIS 3.1 upgrades will be able to handle gigabit speeds without difficulty after analog television channels are switched to digital service.

“We have a five-year roadmap in terms of our video architecture–what we’re doing from an analog-to-digital conversion to free up spectrum on the network for broadband growth,” Hart said. “We’re freeing up spectrum, building out node-splits and then aligning with the [DOCSIS] 3.1 roadmap for 1-gigabit speeds.”

Cable operators are increasingly changing their tune about offering faster speed Internet since Google Fiber arrived on the scene. Recent announcements that Google was planning a major expansion of fiber to the home service in multiple cities around the country has brought a flurry of often vague commitments for expanded fiber networks, particularly from AT&T.

Privately held Cox has maintained a low profile about speed hikes and network upgrades until now. Cox has about six million residential and business customers, with most choosing speeds up to 25Mbps. Esser offered no details about pricing or availability and Hart told an audience at the Los Angeles Cable Show this week Cox was still concentrating on expanding availability of 150-200Mbps service across its footprint. With that in mind, it is unlikely Cox will introduce gigabit service on a widely available basis this year.

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Bloomberg’s Betty Liu talks with Cox CEO Pat Esser about the cable company’s plans for gigabit broadband speeds coming later this year. (2:30)

Mediacom sent Stop the Cap! a press release today indicating it is boosting broadband speeds at no charge for customers starting this June and continuing through the summer months.

• Prime Plus ($59.95), originally 30/2Mbps will be upgraded to 50/5Mbps in early June;
• Ultra ($79.95), originally 50/5Mbps will be increased to 100/10Mbps in early June;
• Ultra Plus ($99.95), formerly 105/10Mbps, increases to 150/20Mbps and will be rolled out to most Mediacom systems over the summer. Upload speeds may initially stay at 10Mbps until the upgrades are complete.

Mediacom is testing 305/10Mbps service in Cedar Rapids, Ia. to compete with CenturyLink. It costs $199.95 a month. Standard Internet service ($49.95) remains unchanged at 15/1Mbps.

“Today, we’re either pulling down data or sending something up,” Mediacom spokeswoman Phyllis Peters said. “People want faster speeds coming down because a lot of people maybe are tapping into things coming down. They want more speed in both directions because they’re sharing video files and higher-bandwidth applications.”

The company said it will be the eighth time in the last 10 years it will have increased Internet speeds, in each case without raising prices.

“We’re doubling our network capacity every 18 months,” Peters said.

A 2011 state law largely written by Time Warner Cable will likely keep Charlotte, N.C. waiting for fiber broadband that nearby Salisbury has had since 2010.

North Carolina is dominated by Time Warner Cable, AT&T and CenturyLink. Google and AT&T recently expressed interest in bringing their fiber networks to the home in several cities in the state, but neither have put a shovel in the ground.

Fibrant, a community owned broadband provider in Salisbury, northeast of Charlotte, not only laid 250 miles of fiber optics, it has been open for business since November 2010. It was just in time for the publicly owned venture, joining a growing number of community providers like Wilson’s Greenlight and Mooresville, Davidson and Cornelius’ MI-Connection. Time Warner Cable’s lobbyists spent several years pushing for legislation restricting the development of these new competitors and when Republicans took control of the General Assembly in 2011, they finally succeeded. Today, launching or expanding community broadband networks in North Carolina has been made nearly impossible by the law, modeled after a bill developed by the American Legislative Exchange Council (ALEC).

With fiber fever gripping the state, Fibrant has gotten a lot of attention from Charlotte media because it provides the type of service other providers are only talking about. Fibrant offers residents cable television, phone, and broadband and competes directly with Time Warner Cable and AT&T. Although not the cheapest option in town, Fibrant is certainly the fastest and local residents are gradually taking their business to the community alternative.

Charlotte, N.C. is surrounded by community providers like Fibrant in Salisbury and MI-Connection in the Mooresville area.

“A lot faster Internet speeds, a lot clearer phone calls,” said Sidewalk Deli owner Rick Anderson-McCombs, who switched to Fibrant after 15 years with another provider. His mother, Anganetta Dover told WSOC-TV, “I think we save about $30 to $40 a month with Fibrant and the advantages of having the speed is so much better.”

Julianne Goodman cut cable’s cord, dropping Time Warner Cable TV service in favor of Netflix. To support her online streaming habit, she switched to Fibrant, which offers faster Internet speeds than the cable company.

Commercial customers are also switching, predominately away from AT&T in favor of Fibrant.

“Businesses love us because we don’t restrict them on uploads,” one Fibrant worker told WCNC-TV. “So when they want to send files, it’s practically instantaneous.”

Fibrant offers synchronous broadband speeds, which mean the download and upload speeds are the same. Cable broadband technology always favors download speeds over upload, and Time Warner Cable’s fastest upstream speed remains stuck at 5Mbps in North Carolina.

AT&T offers a mix of DSL and U-verse fiber to the neighborhood service in North Carolina. Maximum download speed for most customers is around 24Mbps. AT&T has made a vague commitment to increase those speeds, but customers report difficulty qualifying for upgrades.

Time Warner Cable is a big player in the largest city in North Carolina, evident as soon as you spot the Time Warner Cable Arena on East Trade Street in downtown Charlotte.

Taxpayer dollars are also funneled to the cable company.

Time Warner Cable’s $82 million data center won the company a $2.9 million Job Development Investment Grant. Charlotte’s News & Observer noted the nation’s second largest cable company also received $3 million in state incentives.

When communities like Salisbury approached providers about improving broadband speeds, they were shown the door.

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WCNC-TV reports that with Google expressing an interest in providing fiber service in Charlotte, Salisbury’s Fibrant has been offering service since 2010. (2:57)

“Our citizens asked for high-speed Internet,” says Doug Paris, Salisbury’s city manager. “We met with the incumbent providers [like Time Warner and AT&T, and that did not fit within their business plans.”

Salisbury and Wilson, among others, elected to build their own networks. The decision to enter the broadband business came under immediate attack from incumbent providers and a range of conservative astroturf and sock puppet political groups often secretly funded by the phone and cable companies.

Rep. Avila, a ban proponent, meets with Marc Trathen, Time Warner Cable’s top lobbyist (right) (Photo: Bob Sepe)

Critics of Fibrant launched an attack website against the venture (it stopped updating in March, 2012), suggesting the fiber venture would bankrupt the city. One brochure even calls Stop the Cap! part of a high-priced consultant cabal of “Judas goats for big fiber” (for the record, Stop the Cap! was not/is not paid a penny to advocate for Fibrant or any other provider).

Opponents also characterize Fibrant as communism in action and have distributed editorial cartoons depicting Fibrant service technicians in Soviet military uniforms guarding Salisbury’s broadband gulag.

In January of this year, city officials were able to report positive news. Fibrant has begun to turn a profit after generating $2,223,678 in the revenue from July through December, 2013. Fibrant lost $4.1 million during the previous fiscal year. That is an improvement over earlier years when the venture borrowed more than $7 million from the city’s water and sewer capital reserve fund, repaying the loans at 1 percent interest. The city believes the $33 million broadband network will break even this year — just four years after launching.

Fibrant is certainly no Time Warner Cable or AT&T, having fewer than 3,000 customers in the Salisbury city limits. But it does have a market share of 21 percent, comparable to what AT&T U-verse has achieved in many of its markets.

Fibrant also has the highest average revenue per customer among broadband providers in the city — $129 a month vs. $121 for Time Warner Cable. Customers spend more for the faster speeds Fibrant offers.

Some residents wonder if Fibrant will be successful if or when AT&T and Google begin offering fiber service. Both companies have made a splash in Charlotte’s newspapers and television news about their fiber plans, which exist only on paper in the form of press releases. Neither provider has targeted Salisbury for upgrades and nobody can predict whether either will ultimately bring fiber service to the city of Charlotte.

Those clamoring for fiber broadband speeds under the state’s anti-community broadband law will have to move to one of a handful of grandfathered communities in North Carolina where forward-thinking leaders actually built the fiber networks private companies are still only talking about.

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WSOC-TV in Charlotte reports Salisbury customers are happy with Fibrant service and the competition it provides AT&T and Time Warner Cable. (2:12)