The ISP Speed Claim Dilemma

ISPs face marketing issues no different than other providers of goods and services, namely that consumers generally have some expectations about what features and what prices constitute a reasonable offer.

That means every provider wants to appear to have an edge of some sort, and at a minimum, to supply the baseline of features consumers expect.

ISPs have one additional problem, namely that their product is essentially intangible. As with any other intangible product or service, a consumer cannot fully evaluate product claims until after the product is purchased.

But it still is reasonable to argue that most consumers considering the purchase of an Internet access service will evaluate the advertised speed and the advertised price. That means there will always be pressure to advertise the highest possible speeds.

But consumer protection agencies and regulators do not tend to like exaggerated claims. That is why more attention now is focused on how closely ISPs are able to deliver on speed claims. And there might be more work to do on that score in Europe than in the United States.

Actual European Internet access speeds are about 74 percent of advertised speeds during peak hours, a new study sponsored by the European Commission has found. Recent studies by the U.S. Federal Communications Commission have found that U.S. ISPs deliver actual speeds about 96 percent of advertised speeds.

The average download speed across all measured countries was 19.47 Mbps during peak

hours, and this increased slightly to 20.12 Mbps when all hours were considered.

Performance varied by access network technology.

Digital subscriber line services achieved 63 percent of the headline download speed, while cable services managed to achieve 91 percent of headline speeds. Fiber to home or VDSL services delivered 84 percent of headline speeds.

Fiber to home services achieved the fastest speeds in absolute terms, at 41 Mbps. Cable

services achieved 33 Mbps, whilst DSL services delivered 7 Mbps, on average.

In the September 2012 testing period, U.S. ISPs on average delivered 97 percent of advertised download speeds during peak periods, statistically equivalent to the last report, which found that the studied ISPs were able to deliver 96 percent of advertised speeds during peak hours of use, the FCC has reported. Those results were in line with testing conducted in 2011 as well.

On average, during peak periods DSL-based services delivered download speeds that were 85 percent of advertised speeds, cable-based services delivered 99 percent of advertised speeds, fiber-to-the-home services delivered 115 percent of advertised speeds, and satellite delivered 137 percent of advertised speeds, the FCC says.

This compares to July 2012 results showing largely the same performance levels: 84 percent for DSL, 99 percent for cable, and 117 percent for fiber. These results suggest that many ISPs are meeting established engineering goals for their respective technologies.

It isn’t immediately clear why DSL networks in the U.S. market were able to deliver real-world speeds more nearly matching advertised speeds, compared to European DSL networks.

But a reasonable guess is that the gap is explainable almost entirely by ISP marketing claims.

The EC study says two countries did not achieve 50 percent of advertised speed. Those two countries primarily use DSL networks, but more importantly “advertised their services

using only a handful of very high headline speeds.”

Hungarian ISPs delivered actual speeds that were 94 percent of advertised.  DSL services also achieved over 90 percent of advertised speeds. So it appears the difference is the marketing of service, not something inherent in the networks.

Since DSL performance is directly related to loop length, experienced speeds for consumers closer to the central office will increasingly diverge from speeds experienced by consumers further away from the central office.

It makes quite a difference whether the typical speed at 1,000 meters is used as the reference, compared to 5,000 meters.

But loop length is not the only consideration for DSL or other providers. Contention ratios and the degree of sharing also will affect performance. ISPs simply need to market services that reflect all the known limits, if they want to deliver on promised speeds.

But that is the dilemma. A more-realistic set of claims might mean forfeiting an advantage to other providers.

Facilities-Based Competition Often Matters Quite a Lot

Though BT’s Openreach wholesale network has been designed to support an evolution to higher-speed internet access in the United Kingdom, but to this point most of the speed gains have been supplied by rival facilities-based providers, which might be a good argument for allowing facilities-based competition where it makes sense. 

In 2020, some 18 percent of U.K. homes could buy FTTH-based gigabit services. That equates to about five million lines. Somewhere more than two million lines were supplied by BT’s Openreach network in May 2021, though the pace of installation is increasing fast. 

That means three million lines--or about 60 percent--of U.K. FTTH accounts were supplied by facilities-based competitors to BT. 

However, in 2020, a total of eight million homes actually could buy gigabit service, the difference being Virgin Media’s gigabit service available to another three million homes. 

According to Ofcom there is about a two-percent overlap between the two different types of networks, in terms of supply.

 

source: Ofcom 

Supply is one thing, take rates another. In the U.S. market, for example, gigabit connections are purchased by about 10.5 percent of households, though available to more than 80 percent of homes passed by networks that can supply it. 

Over the last half decade, Virgin Media has had more “higher speed” customers than have all the competitors using BT’s wholesale network. Today, “altnets” have emerged as additional suppliers of gigabit speeds. 

Many might assume FTTH means gigabit speeds. It does not. Historically, FTTH might have meant speeds in the hundreds of megabits. Some U.S. FTTH networks installed in the mid-1990s to late 1990s offered speeds only up to 10 Mbps.    

Also common are price comparisons or tracking of “average” or “typical speeds experienced by consumer customers.  Less common are measurements of provisioned speeds. In other words, instead of looking at access technologies, what is the expected bandwidth a customer might obtain, on any network?

That matters for a simple reason. FTTH is not the only available access technology, and not the only possible fixed network platform. Looking only at the numbers of deployed lines, or take rates on those lines, tells us much. It does not tell us the whole story. 

In Germany, for example, Vodafone expects gigabit-per-second connections to be driven by rival hybrid fiber coax networks, not FTTH/B. By 2022, Vodafone expects 72 percent of all gigabit lines to be supplied by cable operators, not FTTH/B providers. 

source: Vodafone 

The point is that we get different pictures of where advanced fixed network internet access stands when we measure by access technology instead of available speed. 

FTTH available lines or provisioned lines alone does not necessarily tell us all we would like to know about user experience. What is the designed-for speed, upstream as well as downstream? A “mere” statistic on FTTH homes passed does not shed light on that question.

If one asks a different question, such as “what percentage of home passings offer downstream speeds of 1 Gbps,” we get a different answer. Or perhaps we cannot get a very good answer. Very few connections are capable of offering such speeds, even using FTTH. 

If we ask other questions, such as “what percentage of lines are symmetrical?” we would get yet another set of answers.  

Even when deploying FTTH, an internet service provider must yet decide what optoelectronics to use, and that of course affects network capabilities. So FTTH does not necessarily tell us much about available speeds.

Nor does the deployment of FTTH by one legacy provider necessarily tell us much about the actual state of gigabit per second or even “hundreds of megabits per second” service. Cable hybrid fiber coax is important in many markets. Rival overbuilders or altnets are important in some markets. 

Eventually, mobile networks will emerge as challenges in some instances. 

Methodology always matters when evaluating the quality of consumer broadband. FTTH is one measure of potential progress. But it is not the only important metric. We always need to know the designed-for speeds. And other platforms also compete. 

So, in many cases, the issue is not “FTTH.” The issue is “gigabit per second speeds.” FTTH is a matter of media, not commercially-available gigabit speeds.

Did the U.S. National Broadband Plan Succeed, or Not?

Did the U.S. National Broadband Plan fail or succeed? Some argue the plan failed. Others might argue it clearly has succeeded. So what is the truth of the matter? It actually is hard to say. 

There are but two quantifiable goals stated in the plan. 

The document says a goal, at the end of 10 years, is connecting 100 million U.S. homes with “affordable” access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 Mbps. 

Another goal was to provide gigabit per second access to anchor institutions such as schools, hospitals and government buildings. 

All the other goals are not quantifiable, except in “yes-no” fashion: did a recommended action actually happen within the plan time frame or not? As with many plans, the issue is targets,  frameworks and rule changes, rather than quantifiable outcomes. 

The plan was couched in terms of “goals” that are either hard to quantify, require the cooperation of many entities in the ecosystem or are not easy to define. Also, the plan itself says it is a “roadmap,” not a firm set of outcomes. 

The plan itself mostly deals with what the government can do, in response to a Congressional mandate to provide “detailed strategy for achieving affordability and maximizing use of broadband to advance “consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, employee training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.”

Some cite the portions of the plan described as “long term” goals, when making their evaluations of plan success. Also, keep in mind that the plan itself was only designed to facilitate commercial actions by others. The government’s role was limited to spectrum allocation and other policies that create incentives for other actors to fulfill. 

So what of the two numerical outcomes? Are 100 million U.S. homes presently buying “affordable” access at 100 Mbps downstream speeds? First off, “affordable” is not quantified and is a matter of interpretation. But are 100 million U.S. homes buying internet access at 100 Mbps?

According to measurements by Speedtest, the average U.S. consumer on a fixed network is getting access at between 124 Mbps and 166 Mbps. And Speedtest reports that 61 percent of all U.S. fixed network internet access services purchased by consumers offer 100 Mbps or higher speeds. 

But there is a difference between supply and demand. The plan specified only demand, not supply. 

Current supply exceeds what the plan called for. But current demand is lower. Only six in 10 customers choose to buy a service operating at 100 Mbps or faster. So 40 percent largely choose service operating at less than 100 Mbps, or some will note, perhaps cannot buy such service. 

Assume there are 139.4 million U.S. households. Assume fixed internet access is purchased by 80 percent of households. That implies a total of 111.5 million locations buying internet access. That seems too high. 

But assume only 126.7 million housing units  actually are occupied. If 80 percent of occupied housing units buy fixed network broadband, that suggests there should be about 101 million subscriptions. That accords with other estimates. 

If 61 percent of those locations buy internet access at 100 Mbps or faster, then 61 million U.S. customers choose to buy service at 100 Mbps or faster. That, of course, is far less than the National Broadband Plan called for. 

Provisioned speeds--bought by customers--differs from available speed, in other words. So should the plan have differentiated between available and provisioned speeds? We cannot say, at this point. So the evaluation of “did the plan achieve its goals” also is a matter of opinion, not “truth.”

Even in hard-to-serve rural areas, 60 percent of residents can buy internet access at speeds of at least 100 Mbps. That does not mean they do so. So what is the “truth” of the matter?

While it is difficult to measure speed, actual U.S. broadband speed is more than 100 Mbps, on average, according to Akamai in 2017. Upstream speeds vary by location, but are at or above plan goals in most cities, with performance varying by provider.   

But is access “affordable?” That is a matter of opinion, not fact. Still, prices have fallen significantly. 

“The most popular tier of broadband service in 2015 (BPI-Consumer Choice) is now priced 20.2 percent lower and offers 15.7 percent faster speeds in 2020 on an average subscriber-weighted basis,” says USTA. 

“The highest speed offerings in 2015 (BPI-Speed) are now priced 37.7 percent lower and offer 27.7 percent faster speeds in 2020 on an average subscriber-weighted basis,” USTA says.

 

“When inflation is considered, the real price of the most popular tier of broadband service has dropped 28.1 percent since 2015; and the real price of the highest speed broadband service has dropped 43.9 percent,” USTA notes. 

At the same time, cost per Mbps has dropped 37.9 percent for the most popular service and 56.1 percent for the highest speed service, says USTA. 

Beyond that, an outcome not specified was “Can 100 million U.S. homes purchase--if they choose--internet access at 1 Gbps downstream rates?” The answer to that unasked question also unquestionably is “yes.” Looking solely at cable operators, that portion of the industry alone has 72 million actual accounts. Not all are consumer accounts. 

The cable industry says 80 percent of U.S. homes have gigabit access, while 90 percent of U.S. homes have high-speed access but at top speeds less than 1 Gbps. 

Cable operators alone pass 80 percent of U.S. homes with networks selling gigabit per second internet access, and about 90 percent of U.S. homes can buy high speed access access, but at rates less than 1 Gbps. 

Keep in mind that U.S. telcos have about 33 million internet access accounts, but cable operators have about 72 million accounts, or 70 percent of the installed base. 

So how about gigabit service for anchor institutions. Consider matters in rural areas, where 59 percent of schools, for example, have broadband at gigabit per second rates, or higher. Beyond that, it is hard to see what percentage of schools, hospitals and other anchor institutions presently have gigabit connections. In perhaps 80 percent of communities, that is possible. 

Still, the truth of the matter--whether the plan succeeded or not--is clouded by opinions. 

“What is truth?” occupies much of traditional philosophy, and still manages to maintain its relevance, even in the communications business. 

Truth is that will accords with reality, Wikipedia notes. Another way of saying this is that “truth accords with facts; there being a difference between what is factual and what is merely opinion. A related key concept is that there is a difference between a fact and a value. 

And there often is more “value” or “opinion” than “truth” in most parts of the industry. Consider almost any claims made by marketing staffs, industry lobbyists or the policy advocates who oppose them, public officials or customers. 

The adage that “you are entitled to your own opinions but not your own facts” encapsulates the issue. “Facts” are open to interpretation. Is any country, state, province, city or service provider “doing well” in terms of its deployment of advanced information or communications connectivity? 

That is consequential, since the oldest school of philosophy asserts that truth is that which corresponds with facts, at least since the time of Aristotle. 

How successful are we at value generation and social or educational benefit? And what is the basis for such evaluations. Quite often, we do not agree on the facts. If truth is that which accords with the facts, then contention is inevitable. 

There are more modern systems as well. In the mid-19th century the focus shifts away from individual propositions and towards a system of logically interrelated components or web of belief.

Postmodernism--especially in its radical deconstructionist variants-- essentially abandons the notion that truth is absolute. “Most radical postmodernists do not distinguish acceptance as true from being true; they claim that the social negotiations among influential people ‘construct’ the truth. 

The deconstructed view essentially permits a definition of “truth” which is merely “opinion,” albeit opinion ratified by its acceptance. 

In the early 20th century a school of pragmatists used what we might call a scientific framework, suggesting that what is true is that which works. One obvious issue is that truth becomes relative, since trial, error and interpretation is required to determine what “works.” 

The point is that the difference between fact and value is not as clear as you might think, in non-mathematical endeavors, especially. By extension, it is not as easy to determine “truth” from “falsehood,” either. The social constructionists argue that is simply a matter of the imposition of power. 

As in Lewis Carroll’s book Through the Looking Glass, “truth” is subjective. 

"When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean—neither more nor less."

"The question is," said Alice, "whether you can make words mean so many different things."

"The question is," said Humpty Dumpty, "which is to be master—that's all." 

Verizon FiOS: 46% of Customers Buy 50 Mbps; 55% of Q4 2013 Sales Were for 50 Mbps or Higher

Though some still argue that the United States is woefully behind in Internet access speeds, the more important part of the story is growth.

By the end of fourth-quarter 2013, 46 percent of Verizon Communications consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 Mbps to 500 Mbps, up from 41 percent at the end of third quarter 2013.

In the fourth quarter of 2013, 55 percent of consumer FiOS Internet sales were for speeds of at least 50 megabits per second.

The availability of 100 Mbps to 1 Gbps Internet access services grew the fastest, from 2010 to 2012, according to the  National Telecommunications and Information Administration (NTIA).

Though growing from a low base, availability of 1-Gbps services grew nearly 300 percent between 2010 and 2012.

Availability fo 100 Mbps services grew even more: 448 percent between 2010 and 2012. Availability of 50 Mbps services grew 160 percent between 2010 and 2012.

Services operating at 25 Mbps, arguably the speeds most consumers tend to buy, grew about 57 percent, in terms of availability.

Up to this point, cable operators have been the primary providers of high speed access services of at least 25 Mbps or greater but less than 1 Gbps. That should start to change as more telcos begin to upgrade to networks offering speeds up to 1 Gbps.

Still, at the moment, 82 percent of U.S. homes have access to speeds in excess of 100 megabits per second, while in Europe, only two percent of the population has access to these speeds, Comcast notes.

The availability of 100 Mbps to 1 Gbps Internet access services grew the fastest, from 2010 to 2012, according to a new study by the  National Telecommunications and Information Administration (NTIA). Though growing from a low base, availability of 1-Gbps services grew nearly 300 percent between 2010 and 2012.

Availability fo 100 Mbps services grew even more: 448 percent between 2010 and 2012. Availability of 50 Mbps services grew 160 percent between 2010 and 2012.

Services operating at 25 Mbps, arguably the speeds most consumers tend to buy, grew about 57 percent, in terms of availability.

Availability of lower-speed services has reached virtual ubiquity. Some 98 percent of U.S. residents can buy Internet access at speeds of 3 Mbps or greater and upload speeds of 768 kbps or greater.

About 91 percent of U.S. residents can buy access at 10 Mbps downstream. Some 78 percent can buy access services operating at 25 Mbps downstream.

Also, about 81 percent of U.S. residents can buy mobile broadband access at speeds of 6 Mbps or greater.

And nearly 26 percent of the population can buy fixed wireless service with download speeds at 6 Mbps.

Up to this point, cable operators have been the primary providers of high speed access services of at least 25 Mbps or greater but less than 1 Gbps. That should start to change as more telcos begin to upgrade to networks offering speeds up to 1 Gbps.

Still, at the moment, 82 percent of U.S. homes have access to speeds in excess of 100 megabits per second, while in Europe, only two percent of the population has access to these speeds, Comcast notes.

Europe, U.S. Markets On Track for Widespread 100 Mbps by 2024

Since 2010, regulators in the United States and European Union have called for dramatically-faster Internet access, both targeting speeds of 100 Mbps by about 2020, in the case of the EC.

The U.S. Federal Communications Commission’s National Broadband Plan calls for providing at least 100 million U.S. homes with “affordable access” to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second, without setting a specific time frame.

At the time both initiatives were launched, the goals might have seemed farfetched. In 2010, according to Akamai, typical U.S. and European access speeds were about 4 Mbps, though some studies showed higher speeds.

That we now have major Internet service providers talking about, and in some cases, building networks capable of supplying gigabit Internet access shows how fast supplier thinking has changed since 2010, and how fast higher speeds are being made available, despite a persistent sense in some quarters that progress is way too slow.

In 2002, most U.S. households did not even have access at 1.5 Mbps. By 2013, according to Akamai, typical U.S. speeds were about 10 Mbps, showing roughly an order of magnitude increase over a decade. By that metric, 100 Mbps should be what a typical user buys by about 2024.

The European Commission’s Connected Continent initiative reports that broadband availability now is 100 percent across the EC region, with consumers having multiple choices of service providers.

Access speed, though, remains an issue. People able to use 4G mobile Internet access also rose to 59 percent, up from 26 percent a year ago.

Fixed network Internet access operating at 30 Mbps or higher is available to 62 percent of the EU population, up from 54 percent  a year ago and just 29 percent in 2010.

Fast broadband is already available to 90 percent of homes or more in Belgium, Denmark, Lithuania, Luxembourg, Malta, the Netherlands and the United Kingdom.

As you would guess, the biggest problems are rural areas, where 18 percent of rural households have access high-speed broadband access.

The current objective is downstream speeds of 30 Mbps for everyone in the EC region and at least 50 percent of European households subscribing to Internet connections above 100 Mbps by 2020.

Those goals were announced in 2010.

Standard fixed broadband now covers 95.5 percent of EC homes, while rural coverage of standard fixed broadband was 83 percent at the end of 2012, to an EC broadband report reporting status up to July 2013.

Connections capable of providing at least 30 Mbps download cover 54 percent of EU homes. Cable has the highest coverage, at 39 percent of homes, followed by  very high speed digital subscriber line at 25 percent and fiber to the home at 12 percent of homes.

What in the United Kingdom is called “superfast” (30 Mbps or faster) access accounts for 20 percent of all fixed broadband lines in the EC, as opposed to 12 percent a year ago. Some 57 percent  of such connections are supplied by cable TV operators.

In fact, new entrants provide 77.5 percent of faster connections.

About two percent of homes buy fixed network service operating at 100 Mbps or faster.

About 15 percent of homes buy service at 30 Mbps or faster.

Though consumer behavior might have suggested there was little demand for 50 Mbps or 100 Mbps Internet access in the past, the primary reason for limited demand was the cost. As gigabit access network pricing has been redefined, to about $70 or $80 a month in the U.S. market, for example, demand is at least as high as for today’s more common 20 Mbps to 40 Mbps services.