Let’s Put Gigabit Internet into Some Context

by Bernie Arnason

 

It might be the hottest trend in broadband right now, or the latest hype machine in telecom. Depends on your perspective. But wherever your opinion falls with regard to Gigabit Internet services, there’s no denying its impact on the industry. The 1,000 Mbps broadband service is all the rage.

You can probably peg the current momentum to Google and their Google Fiber initiative. By launching initially in three markets – Kansas City, Austin, and Provo, with an additional 9 markets under consideration – Google has significantly raised the profile of gigabit Internet. Large service providers like AT&T and CenturyLink have answered the competitive call posed by Google Fiber, and announced well more than 20 (and growing) gigabit markets. The momentum has pushed the gigabit Internet discussion into the mainstream.

Gigabit service is not reserved for large companies alone. Several independent broadband service providers have launched gigabit services in small town / rural America, including several Pivot clients. There are skeptics, though. Many believe gigabit services are unnecessary and end customers have no need for all of that bandwidth.

I’ve had a chance to talk with a few service providers who have launched and here are some recurring themes that I’m hearing:

  • Demand is low, but that may not be the point: I haven’t spoken to anyone who says there is high demand for their gigabit services. In fact, very few customers take it. But – and this is an important but – many service providers are seeing a “gigabit halo effect.” That is, the introduction of gigabit is causing customers to buy higher tier broadband services and other revenue-generating services like managed WiFi. So while the uptake in actual gigabit may be insignificant, it is driving additional revenue in the form of speed upgrades at lower tiers.
  • Gigabit can be a public relations boom: When done right, introducing gigabit services can generate significant PR value and raise a company’s visibility. Gigabit is hot right now, so local media may take notice. For example, Canby Telcom of Canby, Oregon was featured on the local broadcast news. Free PR is extremely valuable and gigabit can help you get it.
  • Introducing gigabit service can engender enthusiasm: A few GMs I’ve spoken with tell me introducing gigabit has helped generate a healthy dose of enthusiasm at their company, improving morale. Employees are rallying behind it and anything that can help in this regard is a good thing.
  • Customers don’t come close to using a gigabit: For the few customers who actually buy gigabit services, few if any are using that much bandwidth. The highest bandwidth use I’ve heard by a gigabit customer is 100 Mbps, or about 1/10th the capacity.
  • Existing FTTH makes going gigabit relatively easy: If you’re an existing FTTH provider, offering gigabit services is really not that hard. It involves some electronics upgrades and some new customer premises equipment. No one I talked to would have built a gigabit network from scratch. But adding the capability to their existing network made the decision a little easier.

These are all anecdotal observations for sure, but illuminating nonetheless. It helps put gigabit services into some form of context. The biggest takeaway for me: introducing gigabit does create value for the companies that do it, but in ways that may not be so apparent.

Is it worth doing? Potentially. Every service provider will have to evaluate their unique circumstance and make their own decision. Hopefully I’ve added some context to that decision-making process.

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  1. Jeremy Graves says:

    Great insight Bernie – as usual. Let’s not forget the impact on the staff either. One reason why demand is low is because very few front line employees do a good enough job of educating the customer on how the higher tier services will impact their lives. We have to educate the customer first – then we will really see more of an uptick in higher tiers, maybe not to Gig yet, but certainly to higher dollar packages that have no more cost associated with them.

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