In one of the earliest forays into tiered cable-modem service, broadband service competitor Astound Broadband has launched a quartet of packages to residential customers in the St. Cloud, Minn.-area, and the East Bay cities of Concord and Walnut Creek, Calif.
The launch could prove to be an early test of what customers really want from cable-modem service, and could change the definition of cable-modem service as a purely broadband application.
Astound is the brand name for Seren Innovations, a cable subsidiary of energy provider Xcel Energy. Its digital and interactive TV, cable telephony and data services compete with Charter Communications Inc. in the Minnesota communities of St. Cloud, Sartell, Sauk Rapids, Waite Park and St. Joseph, and with AT&T Broadband in Concord and Walnut Creek, Calif. So far Astound has gathered 10,000 customers each in those two state territories.
The data lineup now includes the always-on Astound Internet Access, with up to 64-kilobit-per-second downstream for $17.95; Astound Internet Access Plus, with up to 128 kbps for $23.95; the original Astound High-Speed Internet service, with up to 1.5 megabits per second at $39.95; and Astound High-Speed Plus, with up to 3 mbps for $64.95.
The company's offer of the two lower tiers is a departure from the idea that speed sells cable-modem service. The 64-kbps and 128-kbps packages emphasize the always-on connection and are aimed at customers that only want simple Internet surfing and e-mail.
"They really don't need a broadband application," said Greg Sanderson, Astound's Internet product manager. "We used to think that cable modem meant broadband, but it doesn't have to mean broadband. It can have narrowband applications."
Sanderson said Astound has done some studies on customer interest in the lower-speed tiers, and "we think it is going to be a significant percentage point."
GAMING AND BUNDLING
At the other end of the spectrum, the 3-mbps service is aimed at small office and home office customers and gaming fanatics.
Astound also bundles the two high-end packages with other services. Customers bundling either of the packages with TV or telephone service, or opting for all three, are eligible for discounts of up to 15 percent in St. Cloud and up to 10 percent in the East Bay systems.
While tiered packages generate interest, there are some pitfalls, according to Bruce Leichtman founder of Leichtman Research Group Inc. In particular, he questions whether customers will see a significant difference between the 64k and 128k package.
"Especially because you are dealing with not the early adopter — you are dealing with the second wave, and they don't know the difference between 64 and 128," he said. Leichtman also noted that because the 3-mbps offering is not a guaranteed data rate, Astound could run into trouble given the customers the service will attract.
"You had better be delivering on that — if you are going charge higher, that is going to be a very demanding audience, and you'd better be ready for that," he said.