Telcos Feel the Need for Speed

Verizon Fires Out 500-MBPS Fios Internet Tier; AT&T Targets 100-MBPS
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Verizon Communications and AT&T both announced plans to goose broadband speeds last week, but only one of the telco offerings is fast enough to put U.S. cable operators at a competitive disadvantage.

Verizon unleashed a new Quantum FiOS offer that pumps out 500 Megabits per second downstream and 100 Mbps upstream, a tier that could apply some pressure on the current capabilities of cable’s DOCSIS platform.

AT&T, meanwhile, outlined plans to upgrade U-verse to a more pedestrian 45 Mbps downstream in the coming months, with plans to amp that, first up to 75 Mbps and then to 100 Mbps further down the road.

Verizon’s new tier starts at $299.99 per month as a stand-alone service, but offers a price break when it’s bundled with other FiOS services. And it’s not available in across the entire FiOS footprint of 18 million homes in parts of 12 states, plus Washington, D.C.

Verizon spokesman Bill Kula declined to identify the markets where it’s now available, but noted that the telco expects to offer the new 500-Mbps service to at least 70% of its FiOS Internet customer base by the end of 2014.

The new tier is a leap from the 300-Mbps downstream and 65-Mbps upstream service Verizon introduced last June. The telco has not disclosed how many of its 5.8 million FiOS Internet customers subscribe to each speed tier, but Kula said that more than one-third take speeds of more than 50-Mbps downstream/25-Mbps upstream. The 50-Mbps/25-Mbps tier will serve as Verizon’s “sweet spot” for the foreseeable future, Kula added.

For now, Verizon is holding off on taking the Google Fiber route and offering 1 Gigabit per second. “We’ll continue to watch very closely the reaction from the market and make decisions based on any potential changes in the bandwidth speeds that we offer,” Kula said.

AT&T, meanwhile, will accelerate U-verse Internet speeds to 45 Mbps “in the next few months” and get the telco pointed toward speeds of 75 Mbps and 100 Mbps “in the near future,” company senior vice president and chief financial officer John Stephens said on AT&T’s third-quarter earnings call last Tuesday (July 23). U-verse’s downstream speed currently tops out at 24 Mbps.

The coming speed increases are the result of Project VIP, a three-year capex investment plan that will expand AT&T’s U-verse footprint by an additional 8.5 million customer locations, for a total penetration of 33 million homes.

While AT&T’s new speeds don’t pose much of a threat to major MSOs, Verizon’s new tier outpaces the current fastest residential DOCSIS 3.0 tiers offered by Comcast (105 Mbps down/20 Mbps up), Cablevision Systems (101 Mbps down/35 Mbps up), and Time Warner Cable (100 Mbps down, in select markets).

But MSOs have the tools to juice up DOCSIS speeds if needed. The latest DOCSIS 3.0 modems are capable of bonding 24 to 32 downstream channels — enough to provision maximum speeds of 1 Gigabit per second or more, and enough headroom for tiers that provide advertised speeds of at least 300 Mbps. The coming DOCSIS 3.1 platform is targeting potential speeds of 10 Gigabits per second down and 2 Gbps up.

Comcast is using its fiberbased Metro Ethernet platform to power Xfinity Platinum, a 305-Mbps down stream/65-Mbps upstream residential service currently limited to its Northeastern cable systems.

FOCUSED ON 500

Verizon’s new 500-Mbps tier carries a standalone price of $299.99 per month. Here’s how it’s priced when combined the telco’s double- and triple-play packages:

With FiOS TV:

$310 per month when paired with Select HD, FiOS TV’s sports-free video service

$320 per month with FiOS TV Prime  

$335 per month with FiOS TV Extreme

$355 per month with FiOS TV Ultimate

With FiOS Digital Voice:

$315 per month

500-Mbps Triple-Play Packages:

$330 per month with FiOS Select HD and FiOS Digital Voice

$340 per month with FiOS TV Prime and FiOS Digital Voice

$355 per month with FiOS TV Extreme and FiOS Digital Voice

$375 per month with FiOS TV Ultimate and FiOS Digital Voice

Bundled customers get a $5-per-month price break when they agree to a two-year contract. Verizon is charging a one-time $100 fee to customers who upgrade to the new tier and are on month-to-month plans.

The business-class version of the 500 Mbps Internet service sells for $380 per month with a dynamic IP address, or $10 less per month with a two-year contract. The same commercial tier with a static IP address costs $399.99 without a two-year contract.

— Jeff Baumgartner

TAKEAWAY

Verizon and AT&T are revving up the competitive engines by introducing a pair of faster high-speed Internet offerings.

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