Next year’s upgrade to DOCSIS 3.1 will support cable broadband speeds up to one gigabit shortly after introduction.

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

Just a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

DSL speed upgrades have been spotty and more modest.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

The year 2013 marked a significant turning point for phone companies that have handled voice telephone calls for over 100 years. For the first time, the volume of domestic telephone calls and the revenue generated from them was nearly flat. For the last two years, both are now in decline on the wireless side of the business as North Americans increasingly stop talking on the phone and text and message instead.

The U.S. wireline business peaked in the year 2000 with 192 million residential and office landlines. Over the next ten years, close to 80 million of those — 40 percent, would be permanently disconnected, replaced either by cell phones, cable telephone service, or a Voice over IP line. Wireless companies picked up the largest percentage of landline refugees, most never looking back.

Over one-third of more than $500 billion in annual revenue generated by telecom companies in 2013 came from voice services. Although that sounds like a lot, it’s a pittance of a percentage when compared to 2005 when AT&T, Sprint, T-Mobile, and Verizon Wireless earned most of their revenue from voice calls. Ten years ago, wireless companies principally sold plans based on the number of calling minutes included, and many customers often guessed wrong, paying per minute for calls exceeding their allowance.

At first, this represented a revenue bonanza for the wireless industry, which earned billions selling customers minute-based calling plans that came with built-in cost-controlling deterrents for long-winded talkers — the concern of using up their calling allowance.

Starting in 2008, wireless industry executives noticed something peculiar. While revenue from texting add-on plans was surging, the growth in calling began to level off. Wireless voice usage per subscriber peaked at an average of 769 minutes in 2007 and began falling after that year. By 2011, the average customer was making 615 minutes of calls a month. As customers began downgrading calling plans, wireless carriers shifted their quest for revenue towards text messaging.

For awhile, texting earned wireless companies astounding profits that required little extra investment in their networks. SMS service at most carriers was effectively priced at $1,250 per megabyte, broken up into 160 byte single messages. In 2011, over 2.3 trillion text messages were exchanged. A message that cost a wireless carrier an infinitesimal fraction of a penny to send and receive cost consumers up to 20 cents or more apiece if they lacked an optional texting plan. To further boost revenue, some carriers like Verizon Wireless began to pull back offering customers a variety of tiered texting plans with different messaging allowances, switching instead to a single, more expensive unlimited texting plan. Many customers balked at the $19.95 a month price and began exploring other forms of messaging each other.

The industry’s demand for profit eventually threatened to kill the goose that laid the golden egg. At the same time wireless carriers were raising prices on text messages and forcing customers into expensive texting add-on plans, free third-party messaging apps began eating into texting volume. By 2012, the use of SMS declined for the first time, with 2.19 trillion text messages sent and received, down 4.9 percent from a year earlier.

It took little time for the wireless industry to realize the days of offering plans based on calling minutes and texting were quickly coming to an end. Younger users began the cultural trend of talking less, texting more — but using a growing number of free alternative apps to do so. As a result, both AT&T and Verizon shifted their plans away from focusing on revenue from calling and texting and instead moved to monetize data usage. Today, both carriers offer base plans featuring unlimited voice calling and texting almost as an afterthought. The real money is now made from selling packages of wireless data.

Wi-Fi calling allows customers to make and receive voice calls over a Wi-Fi connection, not a nearby cell tower. The prospect of bundling that option into a cell phone just a few years ago would have been unlikely at some providers, unthinkable at others. It was never considered a high priority at any traditional carrier, although T-Mobile began offering the service all the way back in 2007.

Since most calling plans now bundle unlimited calling, letting calls ride off the traditional cellular network is no longer much of an economic concern.

Some even expect carriers to eventually embrace Wi-Fi calling, declaring it superior to alternatives like Hangouts and Skype, which require an app to handle the call. A Wi-Fi call can be received by anyone with a phone.

This month, the last holdout, Verizon Wireless, capitulated and announced it had won approval from the FCC to introduce Wi-Fi calling to customers, joining Sprint, T-Mobile, and AT&T. But Verizon plans to initially limit that service, offering an app that must be installed to make and receive Wi-Fi calls. The other three carriers integrate Wi-Fi calling directly into the primary phone call app already on the phone.

The introduction of the service is unlikely to have a significant economic impact on any wireless carrier. Most have ample room on their networks to handle cell call volumes. Whether a call is placed over Wi-Fi or traditional cellular service, it will ultimately end up on the same or a similar IP-based phone switch as it makes its way to the called party.

With little revenue-generating opportunities for voice calling or SMS messaging, companies have nearly stopped the practice of monetizing individual telephone calls, preferring to offer unlimited, all-you-want calling and texting plans that used to cost consumers considerable amounts of money.

Now wireless carriers see fortunes to be made slicing up and packaging gigabytes of wireless data, sold at prices that have little relation to actual cost, just as carriers managed with text messaging for the last 20 years. A Verizon Wireless customer using 12GB of data in October that kept a now-grandfathered unlimited data plan paid just under $30 for that usage. (This month Verizon raised the price of that coveted unlimited plan by $20 a month.) Verizon charges $80 for that same amount of data on its new “XL” data plan. Verizon’s cost to deliver that data to customers is lower than it was five years ago, but customers wouldn’t know it based on their bill. As always with the wireless industry, costs often have no relationship to the price ultimately charged consumers.

Since Verizon Wireless stopped selling unlimited data plans and turned data into a precious commodity usually worth about $10 per gigabyte, the company can afford to give some of it away to their loyal customers.

This holiday season, Verizon Wireless is handing out up to 3GB of wireless data a month, but only to those who ask. As part of Verizon’s Thanksgiving promotion targeting holiday travelers, customers can get a free gigabyte for use immediately and another gigabyte to use next month just by clicking on a link. The offer can only be redeemed once per account on qualifying plans and is shared by all lines on an account.

Users who want even more free data can snag an extra 2GB a month for three months by downloading Verizon’s Go90 online video app (for iOS and Android) and registering for an account. Your confirmed registration will trigger an immediate gift of 2GB of wireless data for your current month’s data plan and an extra 2GB for the next three billing cycles as well. If Go90 proves uninteresting, you can uninstall it and still get free data during the length of the promotion.

This promotion is only good if you have a More Everything or Verizon Plan. It is not available if you use prepaid service, a different grandfathered plan, or do not keep your account in good standing. National and government accounts also do not qualify. Go90 videos are disabled for jailbroken or rooted devices, although you may still register and participate in the promotion if you use such a device.

Among Verizon’s other Thanksgiving promotions customers can grab on Wednesday, Nov. 25:

• A free $5 iTunes Gift card while supplies last;
• An unspecified number of free eBooks, music, movies, TV an app downloads from Amazon.com;
• A free 30-day trial of Pandora One;
• Up to $20 off a Lyft ride, where available;
• Free airport Wi-Fi from Boingo;
• Free 30-minute Gogo Wi-Fi session on select airlines.

Verizon’s website offers an option to send yourself a reminder to participate when the promotions become active next week.

Verizon Wireless has informed employees Wednesday that its national operation will be reorganized resulting in significant job cuts.

The nation’s largest wireless carrier also operates 20 regional offices to handle everything from operations to call center functions. Verizon intends to cut that number to six, with employees likely offered a limited number of positions if they agree to relocate. Verizon has a workforce of 177,900 as of the end of the third quarter. Sales and retail store employees will be unaffected in this round of job cuts.

Verizon will not be passing any savings from the cost cuts on to customers. In fact, the company recently announced rate increases of $20 a month for its remaining unlimited data plan users.

With almost 70 percent of Verizon’s revenue now coming from its highly profitable wireless operations, a reduction in regional offices could prove disruptive, especially if it results in a reduction in customer service representatives. Verizon would not specify exactly how many positions will be cut or how much was likely to be saved by consolidating offices, or which would be closed.

Google Fiber today announced it would accept applications from Oklahoma City, Jacksonville, and Tampa to become the next cities qualified for its fiber to the home service.

We’re inviting Oklahoma City, OK, Jacksonville, FL and Tampa, FL, to explore bringing Google Fiber to their communities, as we did last month with three other cities. These growing tech-hubs have a strong entrepreneurial spirit and commitment to small business growth. Their list of accolades is long—from Jacksonville’s title as a top 10 city for tech jobs, to Tampa Bay’s #2 spot on the list of best cities for young entrepreneurs, to Oklahoma City’s recognition as the #1 city to launch a business. One of our goals is to make sure speed isn’t an accidental ceiling for how people and businesses use the Web, and these cities are the perfect places to show what’s possible with gigabit Internet.

Google continues its informal boycott of the northeastern United States, where community interest in fiber service has been rebuffed through a lack of responsiveness.

The three latest cities will have to prove they can meet Google’s extensive list of requirements on everything from zoning to pole attachment access and fees. Things that tend to upset Google include endless zoning paperwork, intransigent bureaucracy, and dealing with an excess of county, city, town, and village governments (states in the northeast are also often notorious for layers of local government, all demanding compliance with local codes.) Communities are even expected to get their arborist on board.

Local governments that take the attitude Google must win them over are unlikely to ever see the service. Those that bend over backwards to accommodate the fiber project are the ones managing successful applications. In other words, ask not what Google can do for you, ask what you can do for Google.

Tampa is the first city invited to apply that is also served by Verizon FiOS, although Verizon is in the process of selling its wired networks in Florida to Frontier Communications. Tampa’s cable competitor is Bright House Networks, itself in the process of being sold to Charter Communications. Jacksonville is Comcast and AT&T country and OKC is served by AT&T and Cox Communications.

Making it to the invitation list does not guarantee Google Fiber service, although most local governments are lobbied by their constituents to do whatever is necessary to secure fiber competition.