Could a speed test like this be in your future?

Comcast is entering the gigabit broadband business and is guaranteeing customers willing to pay for the experience will not be subjected to a usage cap.

Comcast’s Gigabit Pro will arrive next month in select Atlanta neighborhoods located within one-third of a mile of Comcast’s fiber backbone network in the city. Promising 2,000/2,000Mbps unlimited fiber-to-the-home service (at a yet to be disclosed price), Comcast hopes to upstage Google Fiber and AT&T U-verse with GigaPower which are both working to upgrade Atlanta to 1,000Mbps service.

“We’ll first offer this service in Atlanta and roll it out in additional cities soon with the goal to have it available across the country and available to about 18 million homes by the end of the year,” said Marcien Jenckes, executive vice president of consumer services for Comcast. “Gigabit Pro is a professional-grade residential fiber-to-the-home solution that leverages our fiber network to deliver 2Gbps upload and download speeds. We’ve spent a decade building a national fiber backbone across 145,000 route miles of fiber. This new service will be available to customers that are within close proximity to our fiber network.”

Comcast says it will price Gigabit Pro below the cost of its current Extreme 505 (505/100Mbps) service, which costs $399.95 a month, not including the $250 technology activation fee, $250 installation fee, and three-year contract with up to a $1,000 early cancellation penalty. It seems unlikely Comcast’s price for 2Gbps will hover near Google and AT&T’s usual $70 fee for 1Gbps service. Comcast has to bring fiber from its nearest fiber node to a customer’s home and install commercial-grade equipment capable of handling 2Gbps. Existing Extreme 505 customers will be upgraded to 2Gbps for no additional charge.

Comcast officials have repeatedly stressed its 2Gbps tier will be exempt from usage caps, which makes it the only unlimited residential broadband offering available to Comcast customers in Atlanta. Other residential customers are now subjected to a 300GB usage cap with $10/50GB overlimit fee.

Marketing Comcast’s 2Gbps offering may prove tricky because potential customers must live close to pre-existing Comcast fiber. If you don’t qualify, Comcast won’t pay to bring fiber infrastructure your way. Those outside of the fiber service area will continue to be serviced by standard coaxial cable. Comcast will wait for DOCSIS 3.1 to be officially available before deploying more speed upgrades in 2016. It promises to boost speeds up to at least 1Gbps if demand warrants.

The sudden announcement Comcast was willing to ditch part of its HFC coax network in favor of fiber, almost unprecedented for a major cable operator, and boost speeds beyond a gigabit may also be used to boost its chances of winning approval of its merger deal with Time Warner Cable. TWC Maxx, Time Warner’s own speed upgrade effort, only raises Internet speeds to a maximum of 300Mbps. Comcast had promised to upgrade Time Warner Cable customers’ speeds as part of the merger, but TWC Maxx offered most customers better speeds than what Comcast offered most of its residential customers.

Article was updated to correct the upload speed for the 505Mbps Comcast tier. It is now evidently 100Mbps, up from 65Mbps.

AT&T is rolling out its gigabit fiber service in Cupertino, Calif., but if you want it you will pay $40 a month more than those who live in cities where Google Fiber offers competition.

AT&T U-verse with GigaPower launched Monday in “select areas,” which traditionally means it won’t be immediately available to most customers. The San Jose Mercury News reports AT&T admitted the service will be available only to a few thousand homes for now in the city and refused to give a percentage of how many of Cupertino’s 20,000 homes would ultimately be able to get the service. AT&T is under no obligation to provide the service and can cherry-pick neighborhoods and skip past government buildings, schools, and hospitals. AT&T won’t give any commitments to the city on its gigabit service.

The company justifies charging $110 a month for the same service it charges $70 for in Austin, Kansas City and North Carolina because it can afford to test higher price points where competitors won’t steal their business.

“We are trying to understand how different markets respond,” Eric Boyer, senior vice president of AT&T U-verse told the Wall Street Journal.

AT&T doesn’t treat the home town of their corporate headquarters much better. In Dallas, Gigapower costs $110, down $10 from its initial price. As Time Warner Cable and Google ponder their own broadband upgrades in North Carolina, AT&T suddenly cut the price of GigaPower on Mar. 17 from $120 to $70 in Winston-Salem and Raleigh-Durham.

AT&T customers who do not want the company to monitor their browsing activities have to pay $29 more for privacy protection, which opts them out of AT&T’s tracking systems. Despite the high-speed and price, AT&T still insists on usage caps for its most premium broadband offering. Customers can use up to 1TB per month, after which AT&T slaps overlimit fees of $10 for each 50GB customers use over their limit. Its primary competitors, including Google, Time Warner Cable, Verizon and Charter do not have usage caps. Boyer says he knows of no customer that has exceeded the 1,000GB usage cap. But that also brings the question if no customer has exceeded the cap, why have one?

More importantly, Boyer added the company isn’t yet offering services that would be exempt from the cap but might do so in the future. “We are open to a whole host of options,” he said. Critics would likely call that an end run around Net Neutrality.

Competition is the significant driver pushing AT&T and other providers to accelerate broadband upgrades and lower prices for higher speed tiers. In markets where cable operators face DSL competition from the phone companies, speeds are lower and prices are higher. Where an incumbent announces major upgrades like GigaPower or Time Warner Cable Maxx, competitors are forced to respond with upgrades of their own.

That leaves cities served by independent telephone companies like Frontier, CenturyLink, and Windstream at a distinct disadvantage because none of those companies have announced sweeping broadband speed increases and have relied instead on acquired fiber networks (Frontier FiOS and U-verse), limited fiber rollouts (CenturyLink) and incremental speed increases using VDSL and bonded DSL (all three). Frontier claims its customers are not interested in faster broadband speeds.

The northeastern United States has seen only one major market disruptor — Verizon FiOS, and it has shelved future expansion. Dominant cable provider Time Warner Cable has not seen its market share hurt much by limited DSL speeds offered in many areas by Verizon, Frontier, and FairPoint Communications. It continues to offer a maximum of 50/5Mbps broadband in upstate New York, Maine, and Massachusetts.

Spanish telephone company Telefónica knows the days of traditional ADSL broadband are numbered, so the company is junking its copper wire network and upgrading customers to fiber broadband at no extra charge.

Telefónica president Luis Miguel Gilpérez said the upgrade is part of Spain’s march to be the most digital country in Europe. It also establishes a modern broadband platform on which Telefónica can sell its streaming video and pay TV services to the public. The company holds an 85 percent share in the fiber network.

Gilpérez likened the company’s current top-tier of 100Mbps as yesterday’s news.

“It appears that 100Mbps falls short and customers demand more speed, so the company is looking to develop these services [with] an increase in speed,” Gilpérez told El País.

Spain already has 10.3 million households connected to fiber. Telefónica hopes to reach an additional 3.6 million homes this year, but is threatening to cut its investment if it is forced to share its fiber network with competitors.

Telefónica is already required by Spanish regulators to open its copper network to competing ISPs at a regulated wholesale price. The Comisión Nacional de los Mercados y la Competencia (CNMC), the Spanish trade and competition regulator, is currently proposing to extend open access to Telefónica’s fiber network as well.

At present, the telephone company faces competition from Vodafone/Ono, Jazztel and Orange, which all offer up to 200Mbps speeds. Most expect competitors will boost speeds to match or exceed Telefónica’s new speed offer.

Prices are in Singapore dollars.

One gigabit broadband is apparently too slow for Singapore consumers, so one ISP has introduced the world’s fastest home broadband plan, bundling 2000Mbps Internet access with an Android-based video streaming box and residential phone service for around $65US a month with a 2-year commitment, about the same price Comcast charges for 50Mbps broadband alone.

Singapore’s ViewQwest is the first provider outside of Japan offering residential speeds higher than 1000Mbps, despite the fact few home users have computers equipped to handle the service at its fastest speed.

“We want to offer them the fastest residential Internet connectivity available in the world,” said CEO Vignesa Moorthy. “Our current 1Gbps customers can re-contract for 2Gbps for free. This, coupled with the usual high rate of sign-ups that occurs during events such as IT Show, makes us very confident that we’ll be able to sustain this plan.”

Usage caps, speed throttles, and expensive Internet plans common in the United States and Canada are not an issue in Singapore as fierce competition has created a consumer-friendly price war among the city’s competing fiber to the home providers.

One challenge users will discover is finding a router capable of supporting 2000Mbps speeds. For now, the ISP recommends a $600 enterprise-grade network card if a customer insists on getting 2Gbps on a single machine. But ViewQwest expects most customers will aggregate their 2Gbps connection through multiple consumer-grade routers to give each family member concurrent gigabit speeds that will sustain at least 1Gbps for each user.

Customers will also discover their speeds will only be as fast as the connection to the website they want to reach. For now, that means international content traveling across undersea cables or distant servers will arrive at considerably slower speeds, but as the Internet grows faster, ViewQwest customers won’t have to wait for their ISP to catch up.

Phillip “It isn’t so dumb to own the pipes” Dampier

In 2006, AT&T CEO Ed Whitacre thought his company was at a disadvantage being stuck with “dumb pipes” while Google, Yahoo! (remember them?) and Vonage couldn’t count their earnings fast enough. While AT&T sold consumers plain DSL service, content was king on Wall Street and Whitacre groused it was unfair for bandwidth hogs to use “the pipes for free.” That one statement was the equivalent of throwing a lit match on a hillside in Malibu Canyon and a predictable firestorm over Net Neutrality ensued.

Nine years later, Net Neutrality is now official FCC policy, although the sour grape-eating Republicans will continue to throw Congressional hissyfits along the way. While they rely on tissue-thin evidence to back their assertion the FCC secretly colluded with the Obama Administration to stick it to AT&T and demand its repeal, the future of Net Neutrality will more likely be decided in a courtroom a year or two from now.

Back in 2006 AT&T primarily sold DSL service and was looking for cash to finance its then emerging U-verse platform. AT&T planned to follow cable’s lead, devoting most of the available bandwidth on its fiber to the neighborhood network to cable television programming. Broadband speeds were limited to just under 25Mbps — even less if a large household had multiple television sets in use.

But as the Great Recession arrived and wages stagnated, the cost of what used to be a “must-have” service for most Americans increasingly began to exceed the household budget and the day finally arrived when cable companies started losing more television customers than they were adding. Even worse, cable programming costs continue to spiral upwards and no major cable company can increase cable television rates fast enough to support the usual profit margin the industry counted on.

What Whitacre failed to realize nine years earlier is that broadband providers did not simply own “dumb pipes.” AT&T, Comcast, Verizon, Time Warner Cable, Charter and other providers actually occupy two gilded catbird seats, with AT&T and Verizon dominating the wireless Internet business and Comcast, Time Warner, and Charter dominating at-home viewing and wired broadband. Lawmakers who deregulated both industries predicted pitting AT&T against Comcast or Verizon against Time Warner Cable would create competition not seen since Coke vs. Pepsi. Consumers would benefit and world-class service would result.

Instead, Time Warner Cable now sells Verizon Wireless phone service. Verizon gave up on expanding its FiOS network and is selling off its DSL and FiOS business in pieces to focus on its best moneymaker, Verizon Wireless. Comcast in turn threw in the towel on any notion of offering competing cellular service and, in fact, sold its acquired wireless spectrum to Verizon.

PlayStation Vue’s lineup

The best way to make money is to avoid price wars with your competitors and the evidence shows there is growing peace in America’s Telecom Valley. Comcast can now raise your broadband bill because, for most, Verizon FiOS isn’t an option. AT&T U-verse does not have to hurry speed upgrades to customers if Time Warner Cable delivers no better than 50/5Mbps service in large parts of its service area. Google Fiber remains a minor threat, only available in a handful of cities. AT&T distributed more copies of its press release touting U-verse Gigapower — its gigabit Internet offering — than there are customers qualified to sign up.

Notice that we’ve drifted away from talking about cable television programming. So has the industry, now increasingly dependent on broadband rate increases to make up the difference in revenue they used to take home from their television packages.

But now that the biggest players have a predictable source of revenue, allowing disruptors to further challenge earnings isn’t something your local cable and phone company will allow for long. At the moment, those most likely to cause problems are the growing number of “over the top” streaming video services that do not require a cable television subscription to watch. But they do need broadband — Whitacre’s “dumb pipes” — to reach subscribers. To manage that, services like Apple, PlayStation Vue and Sling TV and their customers must deal with the gatekeepers — AT&T, Comcast, Time Warner Cable, Verizon and others.

What Whitacre thought was a disadvantage is now becoming the best thing in the world — manning a toll booth on the only two roads most Americans can use to access online content.

Today, Sony officially launched its Internet-TV service, “PlayStation Vue” in three cities (New York, Chicago and Philadelphia) with a base price of $49.99/month. In includes more than 50 cable networks and in the three launch cities — local network affiliates. In Chicago and Philadelphia, where Comcast provides cable service, potential customers will need to pay $50 a month for Vue and another $64.95 a month for 50Mbps broadband — the least expensive broadband-only tier that is suitable for high quality viewing. Your combined bill for both services is $114.94 a month. Comcast charges $99.99 a month for its double play – 220 TV channels and 50Mbps broadband — almost $15 a month less for its package, and it includes around 150 more channels than Vue.

Comcast explains its new usage caps.

But Comcast also has another weapon it is testing is several of its markets — the resumption of usage caps and overlimit fees on its broadband service. Comcast customers in most test markets are given 300GB a month, after which they face overlimit fees of $10 for each additional increment of 50GB. While web browsing and e-mail fit more than comfortably within those caps, watching HD video may not. That leaves a potential Vue customer with a major dilemma. Should they pay $15 a month more for service than they can pay Comcast for a better package -and- chew away their usage allowance using it?

Comcast has yet to figure out how to install a coin collector on top of your television set, so you can watch as much Comcast cable television as you’d like. But watching streaming video could get very expensive if it exceeds a future Comcast usage allowance.

Smaller video packages from providers like Sling TV or the forthcoming Apple streaming service might make more sense, but will still be subject to Comcast’s usage caps if/when they are reintroduced around the country, while Comcast’s own television service will not.

This is why cable and phone companies hold enormous power over their potential competitors, even if Net Neutrality is fiercely enforced. Usage caps and usage-based billing represent an end run around Net Neutrality and both are permitted. The FCC has consistently refused to engage on the issue of broadband usage caps, leaving providers with a useful weapon to deter customers from dropping their television package in favor of an online alternative.

With most Americans having a choice of only one or two “dumb pipes” over which they can reach these services, being an owner of those pipes and getting to set the rates and conditions to use them is a very comfortable (and profitable) place to be.