Tuesday, August 23, 2016

From 10 Mbps to 1,000 Mbps in 15 Years

Consolidated Communications has launched gigabit Internet access in Roseville, Calif., just after
AT&T has launched its GigaPower gigabit Internet access service in the Sacramento market, in parts of Placer County (Roseville, Rocklin, Lincoln, and their surrounding communities).

That is notable in some ways because the Roseville market was one of the first in the United to get fiber to the home services from SureWest Communications, formerly Roseville Telephone Company, back in 2002. Back then, state of the art was symmetrical 10 Mbps service.

These days, that doesn’t even qualify as “broadband,” according to the Federal Communications Commission.

In roughly a decade and a half, we have gone from state of the art as 10 Mbps to 1,000 Mbps, two orders of magnitude.

Careful market selection, plus operating cost advantages, arguably are key to all the independent gigabit Internet access provider efforts springing up around the United States. That is as true for Google Fiber as for AT&T, Rocket Fiber, Ting or any other independent entity.

By definition, capital cost is basically not a source of material advantage: all technology is available to all potential buyers. Construction costs, with some exceptions, also are what they are, for all would-be suppliers. The difference is that some suppliers arguably must use union labor, while others have a choice.

Of all choices, it is the market geography which is most important, at the moment. When Google Fiber decided to build in Portland, Ore., there were no other gigabit ISPs in the market. Now, both CenturyLink and Comcast are doing so, making Google Fiber the possible third supplier in the market.

Some observers think Google Fiber’s decision to delay the Portland, Ore. build, and some in the San Francisco Bay Area, are driven by changing competitive dynamics. Google Fiber arguably once aimed--among other things--to spur key ISPs to upgrade their services.

But now that the ISPs are doing so, it apparently is more difficult for Google Fiber itself to sustain its own operations. Google Fiber arguably has succeeded in getting major U.S. ISPs to boost access speeds. So much so that Google Fiber itself has to rethink its own prospects and business model in many markets, apparently.

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