Biggest Impact of Gigabit is Sales of Lower Speed Services, AT&T Finds

Success-based deployment of capital is one way access providers try and match incremental capital investment to incremental revenue. That is why firms from Google Fiber to AT&T build gigabit networks in neighborhoods, not whole cities; where demand for gigabit services and faster speeds is higher than average.

In its latest statements about take rates where it is building its fiber-to-home networks, AT&T suggests it is finding what other internet service providers have tended to find, when offering a range of speeds. Among the primary effects of launching gigabit service is that it spurs buying of services at lower speeds (40 Mbps, 100 Mbps, for example).

“After we launch our 100-percent fiber network in the new market, we're seeing about half of the new broadband customers buying speeds of 100 megabits per second or higher with 30 percent of the customers taking a gig,” says John Stephens, AT&T CFO.

In other words, 70 percent of customers buy speeds other than a gigabit per second, when it is possible for them to buy a gigabit access service.