Wideband: Priced to Move
12:35 PM --
Consumers in Japan clearly desire premium speeds, but, thanks to the competitive environment there, they don't necessarily have to pay premium prices to get their mitts on the fastest services offered by their local service providers.
A case in point is Jupiter Telecommunications Co. Ltd. (J:COM) , Japan's largest cable operator, which hawks a Docsis 3.0-powered "Net Ultra" tier that delivers downstream bursts of up to 160 Mbit/s (the unbonded upstream caps speeds at 10 Mbit/s). (See J:COM Does Docsis 3.0 All Over.)
According to Balan Nair, the CTO of Liberty Global Inc. (Nasdaq: LBTY) (J:COM's corporate parent), 28 percent of all new cable modem subs opt for J:COM's 160 Mbit/s tier.
That's certainly a take rate to be proud of. But what's driving it?
Nair, speaking yesterday at the Women in Cable Telecommunications Rocky Mountain "Tech it Out" conference in Denver, acknowledged that the speed level is a big attraction. However, J:COM has gone out of its way to price the tier in a way that moves the adoption needle.
J:COM sells the 160 Mbit/s wideband tier for 6,000 yen (US$66.78) per month. The next lowest tier (30 Mbit/s down by 2 Mbit/s up) goes for 5,500 yen ($61.23). So, for a mere $5 more, customers can grab the best that J:COM has to offer.
Whether customers really need those speeds is an entirely different matter. Other than downloads that require massive volumes (movies, for instance), Nair said he doesn't really see another application that requires 160 Mbit/s today.
But, in Japan, speed is the key selling point for Internet services. More is perceived to be better, even if not everyone really needs more. Japan, Nair said, "is unique because numbers do matter… speed does matter."
It will matter in the U.S., as well, particularly in markets where MSOs go toe-to-toe with fiber-to-the-home and more advanced DSL services. But, based on how they're pricing it these days, the MSOs that do sell wideband domestically don't appear to be all that concerned about targeting those tiers beyond consumers and businesses that really need those speeds…and are willing to pay a big premium to get them.
Comcast Corp. (Nasdaq: CMCSA, CMCSK), still the most aggressive of the domestic bunch when it comes to Docsis 3.0 deployments, sells its wideband "Xtreme" tier (50 Mbit/s down by 10 Mbit/s up) for about $140 per month. The business-class version runs $189.95. Not exactly a bargain, particularly in these economic times. (See Comcast Wraps Up '08 Wideband Rollout .)
— Jeff Baumgartner, Site Editor, Cable Digital News