Phillip Dampier

While tech fans in Kansas City rejoice over 1Gbps broadband for $70 a month, the average broadband user will think long and hard about the prospect of paying $840 a year for broadband at any speed.

That is why Google Fiber-delivered broadband in and of itself is not a cable/phone company-killing proposition.

We too easily forget our friends and neighbors that seem clueless satisfied with their 3Mbps DSL account from AT&T that they were sold with a phone line package for around $60 a month. Web pages slow to load and constantly-buffering multimedia? In their world, that means “the Internet is slow today,” not their provider.

Phone and cable companies have the internal studies to back up their claims that price matters… a lot. Those who treat the Internet as a useful, but not indispensable part of their life are going to be a tough sell at $70 a month. In fact, it is my prediction many future income-challenged and older customers will splurge on Google’s free-after-paying-for-installation 5Mbps service, satisfied that speed is currently “good enough” for the web browsing, e-mail, and occasional web video they watch on their home computer.

That is why Google was smart to offer the ultimate in “budget Internet.” Free after the $300 installation fee (thank goodness for the interest-free budget $25 payment plan) is far better than $20-25 a month for 1-3Mbps service many cable and phone companies offer their “light users.” It also brings Google’s fiber into the customer’s home, a perfect way to up-sell them later or offer other services down the road.

But the smartest move of all was Google’s very-familiar quasi-triple play package price point — $120 for broadband and television service (they really should bundle Google Voice into the package and cover the phone component for those who still want it). With the phone and cable company charging upwards of that amount already for after-promotion triple-play service, the sticker shock disappears. It’s no longer $70 for broadband, it’s $120 for everything. That is a much easier sell for the non-broadband-obsessed.

It also provides Google a critically-important broadband platform to roll out other services, including those that will appeal to customers who don’t have the first clue what a megabit or gigabit is all about. They don’t really care — they just want it to work and deliver the services they want to use hassle-free.

For Google Fiber to prove a profitable proposition, the search engine giant has to:

• Find a way to manage the huge infrastructure and installation costs, especially bringing fiber lines to individual homes. Middle-mile networks with fiber cables that string down major roadways, but ultimately never connect to individual homes and businesses are far less expensive than providing retail service. Google’s $300 installation fee is steep, but manageable with payments and even better when customers commit to a multi-year contract to waive it;
• Offer the services customers want. An incomplete cable television package can be a deal-breaker for many customers who demand certain sports or movie channels. Although younger customers may not care a bit about cable television service, they also may not be able to afford the $70 broadband-only price. Google will need to attract families, and most of them still subscribe to cable, satellite, or telco TV. They are also the most grounded customers, an attractive proposition for a company dealing with high infrastructure expenses that will take years to pay off. It’s harder to cover your costs selling to a customer still in school and likely to move after they graduate in a few years;
• Sell customers on the hassle and inconvenience of throwing out the incumbent provider in favor of fiber, which will require considerable rewiring. It is one thing to express dissatisfaction with the local cable or phone company, it is another to take a day off from work to return old equipment and have unfamiliar installers in your home to provision fiber service. Some don’t want the hassle or lost time, others won’t switch until they get around to cleaning their messy house or apartment before they invite Google inside;
• Deliver an excellent customer service experience. Google’s current level of support for its web-based services would never be tolerated by a paying broadband/cable customer. Google will have to learn as they go in Kansas City, but first impressions can mean a lot;
• Expansion to get economy of scale. It is highly likely Google Fiber is a marketplace experiment for the company, and one it will study for a long time before it decides where to go next. Google’s “beta” projects are legendary and long, and if their fiber experiment does prove successful (or at least potentially so), the company will need to expand it rapidly to enjoy the kinds of vendor discounts a super-player can negotiate.

Verizon FiOS is the largest fiber to the home network in the United States. Their “take rate” of customers willing to sign up for the service has not exactly put incumbent cable companies into bankruptcy, even with $300-500 reward debit rebate cards and ultra-cheap introductory rates. Motivating subscribers to switch has never been as successful as theory might suggest. But Verizon has also shown other providers they can hard-negotiate significant discounts on hardware and equipment, and price cutting sessions have become ruthless.

At least Google has set its targets at reasonable levels. Only between 5-25% of eligible families have to commit to signing up for service in each “fiberhood” for Google to proceed with service rollout in that immediate area. That’s a realistic target with all of the factors necessary to deem the project a success.

Amazon.com has quietly introduced a 50 megabyte usage cap on Kindle owners using 3G-equipped models to browse web pages over AT&T’s 3G wireless network. Customers exceeding the limit after July 1 reportedly began receiving this pop-up message on their device:

The Experimental Web Browser is currently only available for some customers outside of the United States and may be limited to 50MB of browsing over 3G per month. This limit does not apply when customers are browsing over Wi-Fi.

The new usage cap does not affect users browsing Amazon.com, Wikipedia, and the Kindle store.

Web browsing on an electronic ink display instinctively has a built-in cap: the limited patience of the user trying to browse websites that were never designed for the Kindle experience.

But some enterprising hackers managed to jailbreak the Kindle device and turn its free 3G connection into a wireless mobile hotspot.

That means Amazon was footing the bill for Kindle owners who have re-purposed the device to provide Internet connectivity to wireless phones, laptops, tablets, and other Wi-Fi enabled devices.

At AT&T’s prices, Amazon decided to pull the plug after 50MB, which is barely enough for a few dozen busy web pages accessed during the month.

The successful launch of ViaSat 1, the new satellite broadband satellite.

ViaSat, the parent company of satellite Internet service provider WildBlue, will introduce new pricing and speed packages Tuesday for its satellite broadband service.

WildBlue has offered satellite-based Internet access for several years, but the speeds and heavily-restricted “fair access policy” have left many customers looking for something better.  But for many satellite Internet customers, DSL or cable broadband is miles away and will be indefinitely, so any improvement in satellite broadband is good news.

“Are the days of satellite fraudband finally over?” asks Stop the Cap! reader Madeline who lives in rural Idaho. “I was a customer of WildBlue and Hughes in the past and both were not worth bear spit.”

Madeline and her family are potato farmers, and have been for three generations.  She remembers when the phone company started selling dial-up Internet access and got hooked on the Internet to get updated weather reports, trade farming information, and stay in touch with relatives.  But as the web has grown more multimedia-oriented, dial-up has progressively become an intolerable way to experience it.

“In the 1990s, web ads and pages were simple and they’d load quick,” she says. “Now it’s all video ads and other things that take five minutes or more to appear, so you become stuck waiting until you give up.”

WildBlue’s new satellite, ViaSat 1, may change the perception of a satellite Internet experience that is only slightly more tolerable than dial-up.  With speeds up to 12Mbps, WildBlue’s new speed packages will finally deliver something more than the 1.5Mbps “Pro” service the company currently sells for $80 with a 17GB usage cap.

“The key words with satellite are ‘up to‘ because you never get the speeds they promise, especially at night when everyone is on,” Madeline says. “If you use what they consider to be ‘too much,’ your speeds are cut further.”

ViaSat 1 has a total capacity of 140Gbps, double that of the company’s other satellite — KA-SAT.  That wireless pipeline will eventually be shared by commercial, government and residential customers.  With several hundred thousand anticipated users, WildBlue will continue to restrict usage even with the new capacity.  No word on what specific limits will be put in place, but it is likely customers will at least enjoy a speed boost from the new satellite.  ViaSat hopes to economize using web compression technology and other traffic management techniques to make efficient use of the satellite’s broadband capacity.

Madeline remains unconvinced, however.

“You don’t choose satellite Internet because you want to, you choose it because you have to,” she says. “My guess is WildBlue will continue the same low caps — especially to make sure we steer well clear of web video — and will still charge us a lot of money for service you can’t use all you want.”

Madeline went back to dial-up and frequently visits some nearby relatives who receive Internet from a Wireless ISP.

“While everyone else in the country is talking about Netflix and making video calls to relatives, we are still sending e-mail and setting egg timers to make sure we don’t stay online too long and get throttled before the month is out.”

WildBlue’s Existing Packages (Company-supplied information)

WildBlue’s Acceptable Use Policy.

*A “threshold” (a/k/a “usage cap”) is the amount of data that you can upload or download in a 30-day period before WildBlue’s Fair Access Policy (speed throttle) applies.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Wildblue Demo.flv[/flv]

WildBlue produced this demonstration to show off web browsing over its new ViaSat 1 satellite.  Keep in mind this browsing session took place before the satellite was available for general customer use and the company avoids mentioning its usage limits, which are extremely small in comparison to wired broadband.  (3 minutes)

Verizon Wireless has announced a new $50 unlimited talk, text, and web prepaid plan for price sensitive new customers who don’t mind being stuck with a lower-end feature phone.

The new Verizon Unleashed unlimited plan has been test-marketed since April to prepaid customers in southern California and Florida, but will now be available nationwide from Verizon stores, Best Buy, Wal-Mart and Target.

Although existing Verizon Wireless prepaid customers may be able to sign up for the plan on their existing phones, new customers in test markets were limited to a selection of just a handful of “feature phones” that make web use and texting cumbersome:

• LG Cosmos™ 2 — Now into its second generation, this basic feature phone slightly improved its slide-out keyboard.  The phone was rated “adequate” for an entry-level feature phone, but CNET’s detailed review notes it lacks 3G EV-DO service.  That means you will be web browsing on Verizon’s painfully slow 1xRTT data network.  Verizon has no worries customers using this phone will chew up a lot of wireless data.  Customers rated the build quality as adequate, but found the keys on the first generation of this phone did tend to wear out with a lot of use.  It’s a true “throwaway” phone once the warranty expires.  Repairs always cost more than buying a new phone.  Verizon’s website prices the phone at a stiff $189.99 for month-to-month customers, but it will probably remain priced at around $99.99 for prepaid customers choosing the Unleashed plan.
• LG Accolade™ — A real workhorse basic phone for Verizon Wireless, the Accolade is much better for making and receiving calls than doing anything with texting or web use.  The phone has no QWERTY keyboard to type on, and no 3G service either, so its usefulness for data and texting is extremely limited.  But it is cheap, routinely selling for under $40.  CNET has a video review.  We suspect this phone will not be major part of the nationwide rollout of Unleashed, as Verizon appears to have discontinued it recently.
• Pantech Caper — A front facing tiny keyboard features prominently on this phone, which would have been considered cutting edge five years ago.  Now, it’s considered a ho-hum “feature phone” for the non-smartphone crowd.  It received a fair rating from most reviewers, with the biggest complaints coming from unintentional pocket dialing and button pressing, and a lousy built-in camera.  No 3G service.  The Caper also won’t win any awards for its ergonomics.  Verizon Wireless had been selling this phone in test markets for $80 earlier this year.  CNET’s video review is here.

There is a good chance a few different, more current feature phones will be introduced for the Unleashed plan later this week.  But they will all likely dispense with support for 3G service and lack features many customers increasingly seek on smartphones.

Verizon Wireless has traditionally done poorly in the prepaid market, because its plans are considerably more expensive that those offered by competitors, especially T-Mobile and Sprint.  Verizon Wireless had been charging $95 a month for unlimited talk/text prepaid service plus $0.99 per day for web use.  At those prices, Verizon has been losing prepaid customers, now down to 4.4 million.  Many of those customers fled to providers like Sprint’s Virgin Mobile, which saw a 23 percent increase in its customers, which now number 13.8 million.

Verizon’s $50 unlimited plan matches AT&T’s $50 prepaid unlimited GoPhone plan.  Analysts suggest both companies have set prices (and limitations on the phones that work with the plans) at a level that allows them to compete with lower-priced rivals, but does not encourage their contract customers to switch to a cheaper prepaid plan.

For data-hungry smartphone users, there is little here to persuade anyone to downgrade to a $50 prepaid plan.