Why Nobody Releases Gigabit Take Rates, Yet

Not one U.S. internet service provider publicizes the take rates it gets for gigabit internet access. Historically, no ISPs have done so for their fastest tiers of service, either. The reason, as you might suspect, is that it is highly likely take rates for such tiers of service are rather modest, and tend to be purchased by businesses rather than consumers.

Eventually that could change, but only when purchases of gigabit access service is the mid-tier offer.

Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because take rates were low.

In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about low demand. In fact, demand for 40 Mbps was less than expected.

So “gigabit” internet access remains mostly a marketing platform, not an indicator of what services people actually buy, when they have access to gigabit services.

Value versus price is the likely reason for consumer behavior. “Value (performance versus price)” seems to be evaluated as best in the mid ranges of internet access service, not the “fastest” grades of service. Nor is that an unusual situation for most product categories.

In Australia, in 2016, for example, perhaps 15 percent of consumers purchased the then-fastest speed tier of 100 Mbps. Some 47 percent bought the mid-range service at 25 Mbps. Some 33 percent of buyers were content with service at the slowest speed of 12 Mbps.

Likewise, even where fiber-to-home connections are available, that does not mean most consumers will buy such service, if other options also are available. Data from New Zealand suggests take rates might be 33 percent where FTTH is sold.

Price has much to do with those choices, as do perceptions of value. The safest assumption is that multi-user households are most likely to buy faster tiers of service, reasoning that the connection bandwidth has to be shared by all members of the household.

Also, since there always is a direct relationship between purchases of internet access generally with higher incomes, we should not be surprised if cost-conscious consumers opt for less-expensive packages, while higher-income consumers are most likely to buy the most-expensive packages, which also are the fastest.

The takeaway is that most consumers buy the mid-tier offers. According to Federal Communications Commission data, in 2015 the most popular advertised speed plans purchased by consumers tend to range about 100 Mbps for cable providers.

AT&T U-verse plans generally were in the 45 Mbps range in 2015, while DSL speeds (all-copper access) were quite low, in comparison. Verizon FiOS speeds were generally in the 80-Mbps range.

Over time, as speeds increase, consumers have tended to keep upgrading. But they have generally tended to buy the mid-tier services. That is what AT&T has found as it increases the top speeds available.  CenturyLink also found that to be the case.  

source: FCC  

In 2010, for example, about 40 percent of U.S. consumers were buying Internet access at about 6 Mbps. You might wonder why, but the answer is simple. In 2010, the 6-Mbps service offered what consumers then considered the best value for the money paid.