Does 25 Mbps Change Anything?

With one obvious possible exception--doling out of federal funds to support high speed access in rural and underserved areas--what is the impact of the Federal Communications Commission’s change in definition of “broadband” from 4 Mbps (downstream) to 25 Mbps?

Record keeping obviously changes. When the next report appears, many service providers will no longer be said to be providing “high speed access,” their services being defined out of existence.

Many more residents will said to be “lacking” such access. That, of course, is the purpose: creating a gap; a problem to be fixed. And the shift could be as high as 90 percent, using the latest Akamai study results.

Akamai also says U.S. “adoption rates for 25 Mbps broadband remain fairly low nationwide, with 46 states seeing levels below 10 percent.” That’s the magnitude of the likely reporting change.

It matters “what” is being measured, of course. What likely matters more are Internet service provider investment decisions about what is required in each market to remain competitive. And those decisions are not necessarily related to definitional changes.

Google Fiber, many would argue, is largely responsible for the widespread shift in thinking about headline speeds, shifting the marketing battle to “gigabit” levels, even if most consumers, given a choice, seem to be opting for speeds ranging from 40 Mbps to 100 Mbps, even when they could buy a gigabit service.

As often happens, the market and the technology is moving faster than the definitions or regulations. Cable TV companies, Verizon and many independent ISPs already have eclipsed the new FCC definition, and had done so before implementation of the new minimums.  

Cable TV companies also, by virtue of their use of hybrid fiber coax networks, had generally surpassed all but the fiber to home providers in terms of Internet speed. That largely accounts for the slower speeds notched by CenturyLink and AT&T, for example.

In 2015, according to Ookla tests conducted by PC magazine, only Verizon was among the top providers of Internet access in the U.S. market. Obviously, where Google Fiber operates, it has been the provider of the fastest service, by an order of magnitude.

That should continue to be the case, even where Comcast and other competitors boost speeds. The reason is that Google Fiber sells just one service--at a gigabit--where the other providers tend to offer multiple tiers of service, including services ranging from 50 Mbps to hundreds of megabits, in addition to the headline gigabit services.

That essentially means all consumers buying from Google Fiber are taking the gigabit service. Only some of the customers of other ISPs offering gigabit services will buy the fastest service.

Average global speeds in the first quarter of 2015 were about 5 Mbps, said Akamai. But global  peak speeds were about 32 Mbps.

In the second quarter of 2015, average global speed was still about 5.1 Mbps, while peak speeds
globally were still at 32.5 Mbps.

So it matters which figure is cited and used. In U.S. cities, Akamai says average speeds were between 14 Mbps and 19 Mbps, while peak speeds ranged from 62 Mbps to 73 Mbps. That also is true at the state level, according to Akamai.

You can agree--and most will--that higher speeds are a good thing, and that bumping up a standard to a minimum of 25 Mbps only reflects reality. In fact, that is the case, many would argue, even if “average” and “peak” speeds diverge.

Traditionally, long access loops have been an inhibitor. But investment in optical fiber networks has been ramping up. Comcast, especially, will have the greatests immediate impact, as it will upgrade virtually 100 percent of its consumer locations to 1 Gbps in 2016, with some 85 percent of locations capable of buying a 2-Gbps service.

AT&T likewise has committed to a big upgrade across its footprint as part of its Project VIP, something CenturyLink also is doing, introducing faster speeds and gigabit access in metro areas.

That refers to the supply situation. The other element is the demand. According to the FCC, consumers are upgrading speeds at about a 20-percent annual rate, as well.

The point is that there arguably has been remarkably little impact from the definitional change. For starters, the definition simply raised the minimum to a level many suppliers already were meeting or beating, especially in the case of cable TV operators who are the majority suppliers in the U.S. market.

At the same time, competition from the likes of Google Fiber definitely has encouraged cable and telco suppliers to boost speeds. That, and not a definitional change, is what is driving investment.
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