Jon Riccardo, by his own admission, is a speed snob.
The Braintree, Mass., lawyer needs to access very large legal documents from home, and he also occasionally downloads huge video files.
But mainly, Riccardo is just the kind of guy who covets the latest and greatest. So when Comcast rolled out “wideband” service in his Boston suburb in December — offering speeds of up to 50 Megabits per second — he jumped at the chance to upgrade.
“I wanted it. It was as simple as that,” Riccardo said, proudly adding that he was the very first customer in the South Shore area of Boston to get the $140-per-month service: “They had the senior engineer come out to do the install.”
Comcast’s Extreme 50 has been “working like a charm,” Riccardo said, after a few initial modem-timeout issues that the operator quickly ironed out.
What’s it like having one of the fastest broadband connections in the U.S.? Riccardo verified that the service, which Comcast advertises at 50 Mbps downstream and 10 Mbps upstream, delivers on the promise — in eye-popping fashion.
He said he downloaded a 701-Megabyte file, about the amount of data a standard CD can hold, in a mere 12 minutes. With a 1.5-Mbps DSL line, by comparison, that download could not have completed in less than 60 minutes and may have taken several hours.
“I looked at it and thought I was losing my mind,” Riccardo said. “The download speeds were the most shocking part of it.”
He doesn’t notice much of a difference for regular Internet browsing, though. “I don’t think my brain can process the difference on regular Web pages. Maybe it’s like the difference between millions of colors versus tens of thousands of colors.”
For Comcast, and the rest of the cable industry, early adopters like Riccardo represent a speed-freak demographic that will be critical to retain.
Their core strategy: hold or increase broadband market share in the face of telco threats. Specifically, the MSOs are pushing an alternative to Verizon’s FiOS Internet, an all-fiber network that today delivers a top speed of 50 Mbps. Eventually, such super-fast speeds should become common: Gartner estimates that the portion of broadband users subscribing to a 25-Mbps or faster Internet service will increase from 1% of all broadband users in 2008 to 27% by 2012.
To get there, Comcast relative to its peers has aggressively expanded its rollout of DOCSIS 3.0, the next-generation cable-modem technology that makes those “wideband” speeds possible.
As of January 2009, Comcast claimed to be offering up to 50-Mbps connections to some 10 million premises in markets including Philadelphia, New Jersey, Boston, Baltimore, Atlanta, Chicago, Minneapolis/St. Paul, Seattle and Portland, Ore. Before the end of 2010, the company has said, it will be in a position to offer wideband to the approximately 50 million households in its service areas nationwide.
“It literally changes the landscape of broadband in the U.S. when that many homes have access to these speeds,” said Comcast senior vice president and general manager of online services Mitch Bowling. “If it were in pockets, it wouldn’t be as compelling to applications developers.”
The early verdict: So far, so good. Multichannel News independently contacted and interviewed about a dozen customers of Comcast’s 22- and 50-Mbps services, and with only a few exceptions, they’re thrilled to be among the “fastest fast” elite.
Retaining these high-end aficionados and generating incremental revenue from premium-priced tiers is only part of the reason Comcast and others are racing to raise the speed limits in cable systems. Comcast’s push behind wideband has as much to do with perception — being able to grow “mindshare” by touting the fact that cable can match the best the telcos can offer.
“Very few people are going to pay for the 50-meg service,” said Stratecast analyst Pete Dailey, particularly, he added, with the economy in a downward spiral. “But average consumers are influenced by the hype, and it’s important to be able to lay claim to speed. It’s important to be able to say, 'We have the fastest service you can possibly get.’ ”
Indeed, typical broadband users are satisfied today with speeds of 5 Mbps or so, according to a recent survey of 1,000 consumers by In-Stat (which, like Multichannel News, is owned by Reed Business Information).
Still, Comcast is looking to win actual business from bleeding-edge broadband users. “There are consumers who look for the 50-meg product,” Bowling said. “We have customers who want the very best product available.”
Frank Morley of Park Ridge, Ill., is one of them. He signed up for the Extreme 50 service about a month ago — like Riccardo, he was one of the first in his area to get it installed — because he wanted the 10-Mbps upload speeds to handle backups and file transfers between his home computer and his Web-hosting facility.
With the DOCSIS 3.0 service, a data backup that used to take Morley 60 minutes now finishes in six. “The time it’s saved me was worth the price of admission,” he said. “It’s been flawless.”
While the Extreme 50 tier grabs headlines, Comcast’s Ultra service (22 Mbps downstream and 5 upstream, for $62.95 per month) may prove to be more popular. Mike Faherty of Milton, Mass., upgraded to Ultra because the price of the 50-Mbps package “was kind of outrageous.” As a triple-play Comcast subscriber, he pays only $10 more for the 22/5 service compared with the next tier down, 16 down/2 up, which seemed a far more reasonable proposition.
Aside from a four-hour outage one day, Faherty said, “it’s been great.” He uses the bigger pipe to watch Netflix videos on his Microsoft Xbox 360 gaming console and shares the connection with his housemates.
Across the country, in Albany, Ore., Brad Taylor also raves about his Ultra service, which he upgraded to in December.
“I will tell you, it’s been the greatest service I’ve ever had,” said Taylor, noting that he’s seen the connection deliver bursts of speed up to 45 Mbps.
Now, he’s able to snag an HD movie from Apple’s iTunes Store in about 15 minutes. As a DirecTV customer (which he subscribes to in addition to Comcast’s cable-TV service) he likes the ability to immediately play an HD video-on-demand movie whereas with the 16-Mbps broadband connection, the DirecTV VOD came through in fits and starts. Taylor also has seen improvements using his Slingbox, which provides Internet access to TV programs through a set-top box.
“For a user like me who downloads a lot of video and other files, it’s a great service,” he said.
Another benefit: The wideband service gives Taylor a competitive edge playing Halo 3 on Xbox Live. “A Comcast tech told me that Microsoft is aware of one server that is not even capable of handling these speeds,” he chuckled.
While analysts fret that users may one day prefer to watch TV shows through the Internet, Comcast must offer higher speeds to stave off telco competitors.
Comcast is leading cable’s charge on DOCSIS 3.0 deployment. Charter earlier this month launched a 60-Mbps service in its home market of St. Louis, and Cablevision Systems, Time Warner Cable and Cox Communications each have signaled plans to deliver services based on the next-generation cable-modem technology.
By 2011, about 65 million U.S. homes will be able to get DOCSIS 3.0-based 50 Mbps service — representing more than half the country, according to estimates by independent telecom analyst Dave Burstein.
To be sure, the effect on Comcast’s top line from these wideband services in the near term will be very small, Credit Suisse analyst Spencer Wang said. But strategically, DOCSIS 3.0 is vital.
“We found in our consumer surveys that for broadband, customers value speed and reliability as much as low prices,” he said. “From a defensive standpoint, it makes sense for [Comcast] to roll out DOCSIS 3.0 in FiOS territories, and in areas where FiOS is not available it’s an offensive weapon.”
Besides claiming speed primacy, operators are also deploying DOCSIS 3.0 in order to make their baseline tiers of service even more robust. For example, in areas where it is offering wideband, Comcast has boosted the speeds of its Performance tier customers from 6 Mbps down and 1 up to 12 down and 2 up, for no extra charge. The MSO is able to do that by load-balancing existing customers among the three 6-MHz channels it has allocated in each market for DOCSIS 3.0 channel-bonding.
Customer-retention is the main reason for the “free” boost. “DOCSIS 3.0 gives the operators greater bandwidth per each node,” Stratecast’s Dailey said. “It allows them to increase their lower tiers of service and that’s a lot more important for the operators today.”
Rob Durso, a Comcast subscriber in Hanson, Mass., said he was initially interested in one of the higher-speed services but decided to stick with the regular broadband after the company boosted it from 12 Mbps to 16. “That upgrade was a nice surprise, and that does the job for us,” Durso said.
A higher speed limit still comes with overall usage caps. Officially, Comcast imposes the same 250-Gigabyte-per-month usage cap on wideband users as its regular broadband subscribers. According to the company far less than 1% of its high-speed Internet subscribers comes close to hitting the ceiling.
“I haven’t had a problem — yet — but it would be reasonable to expect that as you pay more you get more,” said Ken Koch, who lives in North Bend, Wash., and recently upgraded to the Ultra service. “If Comcast is going to increase speeds, and expect us to pay for those speed tiers, they should increase the bandwidth cap with each tier.”
As with any new service, Comcast has hit a few speed bumps. And even happy Comcast wideband customers are keeping an eye on FiOS, which boasts double the upload speeds today — up to 20 Mbps — that the cable operator is delivering.
One dissatisfied wideband user, Ray Brillant of Peabody, Mass., has encountered an ongoing technical issue that he said Comcast has yet to solve. Brillant, who downloads movies and plays online games on his Xbox Live, upgraded to the Ultra 22/5 service, but his modem will randomly reboot and his speeds are inconsistent. “As soon as FiOS is available, I will be switching to that,” Brillant said. Bowling called it an isolated incident and offered to have Comcast technicians contact the customer to assist him in resolving the issues.
Another problem in the initial DOCSIS 3.0 launches, according to customers, has been confusion among customer-service and dispatch technicians about provisioning the higher-speed broadband services, including which equipment was needed.
Bowling said Comcast required customer-service representatives to undergo online training on the Ultra and Extreme 50 products in each market prior to launch. The mix-ups described by some early wideband customers “aren’t going to be typical scenarios.”
As Comcast and other cable giants perfect the technology, 50 Mbps will likely become a standard connection speed. Bowling joined Comcast in 1997, when the MSO had just 10,000 high-speed Internet customers and 1.5 Mbps was considered ridiculously fast. (The company had 14.7 million as of September 2008.)
“I remember being in meetings and the question was, 'What are consumers going to do with 1 and a half megs?’ ” he said.
Comcast offers the Extreme 50 and Ultra tiers to about 20% of households and businesses in its footprint:
|<p> <p> <strong>Downstream/upstream speeds</strong> </p> </p>||<p> <strong>Residential price/mo.*</strong> </p>||<p> <strong>Business price/mo.**</strong> </p>|
Extreme 50: $139.95
* Pricing when bundled with cable TV service (except for Extreme 50)
** Includes multiple e-mail accounts, Web hosting and other services
SOURCE: Multichannel News research