"Overinvestment" is as Bad as "Underinvestment"

“Overinvestment” arguably is as big a problem as “underinvestment” where it comes to access facilities. Consider the matter of internet access capabilities. As a marketing platform, “gigabit internet access” now increasingly matters, as it is becoming the U.S. market norm.

But the cost to gain that capability matters, as numerous internet service providers have found that take rates for that package are less robust than might have been expected. CenturyLink, for example, acknowledges it is losing customer accounts in the “under 20 meg” service areas. That mostly is because cable alternatives in such areas are in the hundreds of megabits per second range already, and are heading for a gigabit.

“But when you get to 20, 40 and above, we're seeing growth year-over-year in subscribers,” said said Maxine Moreau, CenturyLink president of consumer markets. “And what we say is as the customers move in higher-speed tiers, we see a corresponding reduction in churn.”

“Even in the markets where we have gig, customers they're not buying gig,” said Moreau. “They might buy 40 meg, 100 meg even though we have one gig available.”

Avoiding “overinvestment” is precisely why Google Fiber, Verizon and AT&T will be looking at 5G-based fixed wireless alternatives to more fiber to the home deployments.


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