Monday, April 11, 2016

Google Fiber Drops "Free" 5-Mbps Service in Kansas City

Whether you consider the original Google Fiber offer of “free 5 Mbps Internet access” an unsustainable gimmick, a marketing platform to grab attention or an offer that puts additional pressure on other Internet service providers, Google Fiber appears to have concluded that the offer no longer serves a purpose.

The lowest level of service now offered by Google Fiber in Kansas City, Mo. and Kansas City, Kan. is 100 Mbps, symmetrical, at a retail price of $50 a month. Current users of that product presumably are "grandfathered" and will continue to receive the original service.

That change undoubtedly signals a full-on focus on competing with telco and cable TV offers in that or lower ranges that consumers might still conclude offers sufficient value and lower price.

In other words, Google Fiber might have concluded, or might have planned all along, to more nearly match existing ISP offers from its main competitors, as well as offering a “best in class” symmetrical 1 Gbps service selling for $70 a month.

In fact, as a symmetrical service, the Google Fiber 100 Mbps offer remains “better than cable TV or telco” in the market, based solely on return bandwidth and complete absence of any usage caps.

Google Fiber first introduced the 100-Mbps tier in its new Atlanta market.

In Atlanta, Google Fiber dropped the  “free” 5 Mbps offer (after the customer paid a $300 connection fee) and replaced its new basic offer to a 100-Mbps symmetrical tier of service, sold for $50 a month.

The new $50 plan will likely be quite important, for several reasons. For starters, many users will understand that 100 Mbps suits all their requirements, even if a gigabit is deemed “better.” But “better” also costs more.

As other ISPs have found, consumers often do not buy the most-expensive tier of services, instead choosing other moderate-speed options that satisfy their requirements. That might be 20 Mbps for some, 40 Mbps for many, or 100 Mbps for lots of people.

Up to this point, Google Fiber has not been able to gauge the extent of demand for speeds far lower than a gigabit, but in triple digits. Atlanta will be its first chance to find out how important that tier is, in terms of customer demand.

Significantly, the $40 tier, offering 100 Mbps, is going to compare favorably, one might argue, with Comcast and AT&T offers in the Atlanta market.

Comcast sells service of 150 megabits for $130 a month and 250 megabits for $150 a month.

AT&T sells (on an initial promotional basis), U-verse 1 Gbps starting as low as $120 a month, or speeds at 100 Mbps as low as $90 a month, at least for the first year.

Since potential buyers typically will compare local offers, Google Fiber’s new $50 for 100 Mbps offer might appeal to many consumers who see Comcast and AT&T selling that level of service for triple digits.

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