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FiOS 500 Leaves Cable in Dust

Alan Breznick
7/23/2013
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Who says broadband speeds don't count?

Certainly not Verizon Communications, which has boosted the maximum speeds for its FiOS Internet service to 500 Mbit/s downstream and 100 Mbit/s upstream. Verizon confirmed press reports Monday that it has begun rolling out its latest "FiOS Quantum Internet" product in "parts of every FiOS market," with plans to deploy the service throughout the entire FiOS footprint by sometime next year. The telco is pitching the new high-speed tier to consumers and businesses for about US$300 a month and up, depending on how it's bundled with other video and voice services.

With the move, Verizon is now offering the fastest broadband speeds among North American cable operators and telcos, easily leapfrogging Comcast Corp. Only Google Fiber -- which has rolled out symmetrical 1Gbit/s service in the Kansas City area and plans to extend service Austin, Texas Provo, Utah and other markets shortly -- now claims higher transmission speeds in the U.S. and Canada.

For cable operators, the question now is how to respond. When Verizon boosted FiOS Internet's top speeds to 300 Mbit/s downstream and 65 Mbit/s upstream in June 2012, Comcast quickly countered with its own fiber-driven 305Mbit/s by 65Mbit/s service in its northeastern U.S. markets. But it's not clear if Comcast or any other U.S. cable operator can or will do so again so fast this time around.

Just last week, Cablevision Systems Corp. boosted most speeds for its broadband customers at no extra charge and streamlined its tiers. But Cablevision, which tops out at 101 Mbit/s downstream for its Optimum Online Ultra 101 tier, increased only the upstream speed for that tier, raising it from 15 Mbit/s to 35 Mbit/s.

North American cable operators will gain the capability to offer downstream speeds as high as 1.2 Gbit/s, thanks to a new DOCSIS 3.0 chipset that Broadcom Corp. is now developing. That cable modem and gateway chipset, which was announced early last month, will enable MSOs to bond up to 32 downstream and eight upstream channels. But it's not slated to go into volume production until the end of the year, meaning that devices embedded with it won't be available for a while yet.

Beyond that, the cable industry is eagerly looking forward to the development of the next-gen DOCSIS 3.1 specs, which CableLabs engineers are now racing to craft in record time. These new D3.1 specs promise to deliver speeds as high as 10 Gbit/s downstream and 2 Gbit/s upstream for operators. But, even under CableLabs' aggressive development schedule, new devices meeting the specs won't be available till next year and the initial product deployments probably won't take place till 2015.

In the meantime, Verizon is moving ahead with FiOS Internet. With the FiOS footprint now covering about 18 million homes, the telco is actively marketing the service to 15 million homes. Of those, it has signed up nearly 5.8 million subscribers, giving it a 38.6 percent penetration rate, after netting 161,000 new customers in the second quarter.

Verizon does not break down how many of its broadband subscribers use each FiOS Internet tier. But the company does say 35 percent of its customer base now subscribes to at least 50Mbit/s downstream speeds.

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

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albreznick
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albreznick,
User Rank: Blogger
7/24/2013 | 7:31:46 PM
re: FiOS 500 Leaves Cable in Dust
Verizon may be charging lots for the latest FiOS Internet service now. But I'm betting that price will come down drastically over time. But, even if it doesn't and Verizon signs up nobody for the service, it can really leverage the bragging rights it has now for the highest non-Google Fiber broadband speeds. I can already see the TV commercials comparing the new FiOS speeds to the fastest MSO speeds. Verizon will gets lot of mileage out of this move.
tmc8080
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tmc8080,
User Rank: Lightning
7/24/2013 | 1:12:00 PM
re: FiOS 500 Leaves Cable in Dust
In fairness, NONE of the cable ISPs can deploy docsis 3.1 before it's ready.. and that won't be until late 2014 at the EARLIEST (Q3/Q4). All that's left is to compete on price per megabit in what they(CV) has.. and they ARE.. when the upgrades from 15/2 to 15/5 and 50/8 to 50/25 took place (known as channel bonding), many customers got a FREE upgrade to 101/35 if they were paying around $45 for boost plus. Granted, this is not a regular price for NEW signups, it does egg Verizon on to try and offer the same. Other reports are some CV customers are bagging 50/25 for as low as $35 too. Apparently retentions dept is giving away the store, would Verizon do the same and compete? Time will tell. I agree with others.. 500/100 is a stunt because the price alone discourages the residential market consumer from buying such a tier. If that's the only thing Verizon does, it does nothing to compete on price for tiers [residential] consumers can actually AFFORD. Many mainstream consumers already living on the edge.. $300 a month is a monthly food bill, car payment, 1/2 to 1/5th of the rent money, an electric bill in the summer with the a/c on, 3 tank fills of gasoline at $4 - $5 a gallon. Most people in the middle class couldn't justify the expense.
GeoTel
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GeoTel,
User Rank: Light Beer
7/24/2013 | 8:08:11 AM
re: FiOS 500 Leaves Cable in Dust
I assume that is the intention of Verizon...and Google Fiber. By keeping it limited for the first few years, they build up their own brand. When they reach the point where they are ready to roll it out across America, it basically sells itself. People are already desperate to get FiOS and the same will happen for Google Fiber. It's an excellent marketing strategy to maximize ROI.
Starstuff
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Starstuff,
User Rank: Light Beer
7/23/2013 | 8:50:22 PM
re: FiOS 500 Leaves Cable in Dust
Only one problem as much as I would like to get FiOS I can't and the majority of people can't either. As a matter of fact the majority of Verizon's customers can't get the elusive FTTH product either.

So the headlines should say Cable DOCSIS3.0 coverage leave Verizon Fios in the dust.

Besides Verizon latest FiOS speed is half of Google's fiber for five times the price.

Just a thought.
brookseven
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brookseven,
User Rank: Light Sabre
7/23/2013 | 8:40:16 PM
re: FiOS 500 Leaves Cable in Dust
FiOS is not 4-5x the price and not 1/2 - 1/20th the bandwidth. The maximum point of aggregation is the uplink out of the OLT. Wonder what Google is doing as uplink out of their switches and at what oversubscription ratio.

Carol - $70/month = $840/year. So, if you say $500/home connected the revenue ROI is under 12 months. From a profit standpoint, it might be 2 - 3 years. But again, it is a positive ROI. The big issue for investment for many carriers is that this is not enough ROI compared to other things they are investing in.

seven
Carol Wilson
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Carol Wilson,
User Rank: Blogger
7/23/2013 | 6:28:28 PM
re: FiOS 500 Leaves Cable in Dust
It will be interesting to see how Sonic's business plan plays out. I admit I'm curious how they survive on $70 a month for 1 Gig service, including phone, when it costs $500 per home to connect and only one in three homes they pass are subscribers. But more power to them if they can make that work, it will definitely put pressure on the big boys. Google is less of a mystery - they get major concessions from the cities they cherry-pick and obviously have deep pockets to begin with.
macemoneta
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macemoneta,
User Rank: Light Sabre
7/23/2013 | 5:38:04 PM
re: FiOS 500 Leaves Cable in Dust
At one-half to one-twentieth of the bandwidth of Google Fiber (and similar ISPs like Sonic), while being 4-5x the price, the FIOS offering is anything but interesting. This is more PR than real, competitive product.
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