CenturyLink Rolls Dice With 1Gig

Matching the speeds of Google Fiber, CenturyLink Inc. has decided to give its cable broadband rivals a run for the money.

CenturyLink Inc. (NYSE: CTL) announced that it plans to launch a symmetrical 1 Gbit/s service in Las Vegas this fall, using fiber-to-the-premises (FTTP) plant to deliver the high speeds to a few thousands homes and small businesses in “select neighborhoods.” Plans call for expanding the rollout substantially throughout the market in 2014.

The Sin City move comes five months after CenturyLink launched a 1Gig pilot in Omaha, Nebraska in May. That trial, which also relies on FTTP plant rather than DSL connections over copper plant, involves up to 48,000 homes in Omaha. (See: CenturyLink Uses Omaha as 1Gig Test Bed.)

CenturyLink's pricing scheme in Las Vegas is somewhat similar to what Google Fiber Inc. is offering, at about $80 a month, as long as subscribers commit to a 12-month contact. In its first two markets (Kansas City and Provo, Utah), Google Fiber is charging customers $70 a month for 1Gig symmetrical service.

CenturyLink will also offer the 1Gig service for about $125 a month when it’s packaged with the telco’s Prism TV IPTV service. Google Fiber charges $120 a month for its broadband plus TV package.

In Las Vegas, CenturyLink’s new service will blow past the top speeds provided by the market’s incumbent cable operator, Cox Communications Inc. , to most of its customers. Cox now offers download speeds as high as 150 Mbit/s to residential and small business subscribers for about $110 a month. But it also offers 1Gig speeds and higher over an all-fiber network to larger commercial customers.

CenturyLink’s new service will also surpass the fastest speeds offered by either Comcast Corp. (Nasdaq: CMCSA, CMCSK) or Verizon Communications Inc. (NYSE: VZ), which have been playing a game of chicken over the last couple of years to see who could boast the fastest broadband speeds across the US. Just last month, Comcast boosted the maximum speeds for its residential broadband service to 505 Mbit/s downstream and 100 Mbit/s upstream in key metro areas where it competes against Verizon’s FiOS Internet service, which tops out at 500 Mbit/s downstream and the same 100 Mbit/s upstream. (See: Comcast Zips Past Verizon.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

albreznick 10/14/2013 | 8:28:36 PM
Re: Hard numbers... Yep, it may be a PR move in many ways. I doubt CL will sign up a ton of customers at these speeds either. But it's still interesting that they feel the need to at leaat seem like they're hiking transmission speeds. It seems that speed still sells, no matter what the detractors say. Whether CL will get that much of a bump in subscribers because of it is another story.
craigleddy 10/14/2013 | 6:45:01 PM
Re: Hard numbers... "Fiber to the press release." Yes, I think you've hit the nail on the head.

KBode 10/14/2013 | 11:05:53 AM
Hard numbers... I'm very interested in seeing hard numbers for both the Omaha and Las Vegas deployments. I still very much think these are really just "fiber to the press release" announcements designed to detract from the fact CenturyLink has so many customers on 1.5 to 6 Mbps DSL (usually capped at 150 GB a month), but still -- I suppose people should be happy to get this kind of progress wherever they can get it, even if this will likely be primarily reserved for high-end housing developments.
brookseven 10/14/2013 | 10:17:40 AM
Re: Where are the profits?  


Content cost is content cost.  ESPN to a Tier 1 video company is about the same whether you are Comcast, Verizon or AT&T.  Lot different cost at say Blue Valley Telephone.

Cable companies biggest cost is content!  What it makes broadcast video is a (relatively) high revenue, low margin product.

Imagine they had 100% line loss in Vegas and do a business case.  Then vary that number and you if they "make money".

brookseven 10/13/2013 | 11:25:36 AM
Re: Where are the profits? Carol,


The normal content costs are the same for IPTV as they are for cable and are based on subscriber count.  I doubt that AT&T is paying any more for content than any cable company.

As to how the business case works for FTTH it has a lot to do with line loss.  If they are losing lots of lines to cable, then FTTH basically pays off quickly.

One other problem and this is where you should hit up vendors.  They may be doing Vegas because of other issues.  Vegas was a spot where Marconi/AFC/Tellabs deployed a lot of the old FTTC product.  As far as I know, Calix was upgrading that plant but there should be a lot of very deep fiber in Vegas.  That means that contstruction costs would actually be only the F3 plant in those areas.


Carol Wilson 10/12/2013 | 10:05:19 PM
Re: Where are the profits? I thought the basic difference with IPTV was the cost of content - a cost that is paid monthly. That's what makes the service unprofitable. 

I understand the competitive angle and maybe saying you have a Gigabit service is enough, even if it doesn't yet reach that many people. i would applaud CL's decision to build FTTP in an area like Vegas - but I'm still strugglig to see where they make money on it. 
dwx 10/12/2013 | 9:29:49 PM
Re: Where are the profits? IPTV isn't really any different than anything else, but the whole solution doesn't really make any money.   Google isn't signing up tons of $80/mo customers, they are signing up a few and then the bulk of them are the ones getting the lower tier services, but they have plenty of money to waste on these endeavors right now.    

Are there really a bunch of users clamoring for 1Gbps Internet service?  Of course not.  Even the Netflix UltraHD content doesn't require all that much bandwidth and  H.265/HVNC is further reducing BW requirements for high-res video.  Even a 4K over-the-top stream isn't going to take more than about 12Mbps.  

CL will need to retain these customers for years to make a dent in the infrastructure cost to reach the user. I know they are trying to stick it to Cox, who is the MSO in both Omaha and Las Vegas, but it will take them a long time to build out the infrastructure while Cox can offer higher speeds than what DSL provides.   I guess they figure they need to replace the copper infrastructure anyways, might as well do it now.    
Carol Wilson 10/11/2013 | 3:59:47 PM
Where are the profits? I've heard that IPTV is a loss leader - but if you combine IPTV with super-cheap 1-gig service, how do you make money? I'm sure it's great for attracting and retaining customers, I just don't really understand the business model. 
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