Monday, August 18, 2014

Canby Telecom Gigabit Service for $20 a Month Increment Over Prior "Fastest Speed" of 60 Mbps

That Canby Telcom, which has been planning to offer 1 Gigabit symmetrical Internet service to its customers in Canby, Oregon, since early 2014, has done so, is not surprising. Perhaps the most interesting angle is how the new top-end gigabit service will lead Canby to readjust prices for slower speed options.

Canby sells stand-alone gigabit access at about $100 a month (10 cents per Mbps), without promotional discounts.

The 60-Mbps offer costs $80 a month ($1.33 per Mbps), without promotional discounts. A 30-Mbps offer costs $60 a month ($2 per Mbps), without promotional discounts. A 10-Mbps service costs $50 a month ($5 per Mbps), without promotional discounts. The most-affordable 5-Mbps plan costs $40 a month ($8 per Mbps).

So the issue really is value. All the plans of 60 Mbps or less offer “per Mbps pricing” between $8 per Mbps to $1.33 per Mbps.

The gigabit access plan offers each Mbps at about 10 cents, or two orders of magnitude less, per Mbps.

You might argue that consumers will pay only so  much for Internet access, as they only will pay so much for video entertainment or voice.

But those consumer value propositions have changed over the years. Once upon a time, consumers would willingly pay about $20 a month for a dial-up service at 56 kbps, an implied per-Mbps price of about $357 or so.

Clearly, the absolute price mattered more than any esoteric “per-Mbps” considerations, and many would argue that will remain the issue, even when gigabit services are offered.

The issue will come at the margin, where a buyer of the $60 a month or $80 a month plans evaluates the value of a $100 a month plan what offers 17 times the speed for a price difference for a price about 25 percent percent higher, or 33 times the speed for a price delta of about 60 percent.

One might argue a single-user household will be hard to convince. But a multi-uer household, especially where there is lots of video streaming going on, with significant work at home happening, is quite another matter.

In that case, even a price increase of 60 percent, to gain 33 times the speed, might be quite attractive.

Canby had begun installing fiber to the home backhaul facilities in 2008 and began installation of drops in 2009.

By the end of 2009, Canby Telcom had wired about 1,000 homes.

By about 2010, the new Fiber Optic Zone (FOz) service offered three speed tiers, the lowest operating at 20/10 Mbps; the intermediate tier running at 40/20 Mbps; and the fastest tier offering 60/30 Mbps.

Canby Telcom provides information, communication and entertainment services to more than 7,000 customers over an 84-square-mile foot print in the northern Willamette Valley of Oregon.  

Canby Telcom will be able to offer gigabit services to more than 2,500 local residents and businesses already wired with fiber to the home.

Monthly Pricing
5 Mbps
Everyday Price: $39.95
Special Offer:
$19.95 / month
10 Mbps
Everyday Price: $49.95
Special Offer:
$24.95 / month
30 Mbps
Everyday Price: $59.95
Special Offer:
$29.95 / month
FOz 60 Mbps
Everyday Price: $79.95
Special Offer:
$39.95 / month
FOz 1 Gbps
Everyday Price: $99.95
Special Offer:
$49.95 / month

The point is that the advent of gigabit services will eventually cause an adjustment of user expectations of what a reasonable value-price offer is for high speed access, with the greatest discontinuity at the top of historic ranges, where a $20 monthly price difference provides 17 times the bandwidth.

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