By End of 2015, I will be able to Buy Gigabit Service from 2 Suppliers

By the end of 2015, I will be able to buy gigabit Internet access from at least two Internet service providers, including the cable TV and telco suppliers serving my neighborhood.

That sudden development raises new questions. Have incumbent ISPs concluded they must beat Google Fiber to a gigabit?

What does that do for demand for other products, such as access at 40 Mbps or 100 Mbps?

And once users become accustomed to such speeds, will their perceptions of experience shift?

The big immediate questions are about incumbent ISP strategy.

Among the reasons Google Fiber launched Google Fiber was to spur just those sorts of investments by the major U.S. Internet service providers, and one would have to say Google Fiber is succeeding.

But a sudden response now suggests U.S. incumbent ISPs have decided the challenge from Google Fiber simply has to be met. Where the dominant cable TV and telco competitors have essentially waited to see what would happen, Google seems to be getting huge market share.

So what now seems to be happening are preemptive strikes by the incumbents, to acquire as much of the gigabit market as possible before Google Fiber arrives locally, disrupting Google Fiber’s ability to make easy gains and develop a positive cash flow position.

The obvious related question is what happens to profit margins for high speed service. Some would say Google long has wanted costs as close to zero as possible, and the preemptive incumbent ISP moves suggest Google also is getting its way on that score.

At the same time, some believe demand for services from 40 Mbps to 105 Mbps also will get a big boost, either because ISPs upgrade customers to those plans without a price increase, or because consumers now will see value in upgrading to faster speeds, if not all the way to a gigabit.

To be sure, some will say the cost of the gigabit services offered by cable TV and telco providers is an issue. That is more likely to be the case where Google Fiber is not viewed as a potential competitor.

Where Google Fiber must be confronted as a local competitor, prices are likely to align around Google Fiber’s pricing leadership.

Even where that is not the case, Google Fiber price leadership still matters, as it sets consumer expectations.

In my own area, the difference between 100 Mbps and 1,000 Mbps now is about $58 a month, for a stand-alone high speed access service not bundled with voice or video.

On a stand-alone basis, a 100-Mbps service might cost $92 a month. On a stand-alone basis, it might cost $151 a month for a gigabit service, with no discounts for bundling.

Some will object to those levels of pricing. Some of us would counter “just wait.” I used to pay $100 a month for 700 kbps.

On a triple play bundle, I could buy a gigabit for about $80 a month, from one supplier.

The caveat is that those prices do not yet reflect the entry of the second competitor, by the end of the year. I expect prices will fall.

Many consumers actually buy dual-product or triple play bundles, so the “actual” cost for the high speed access is hard to determine with precision, but using an $80 figure for stand-alone video, and $50 each for voice and Internet access, a triple play bundle costing about $130 might infer promotional prices of about $58 a month for video and about $36 each for voice and high speed access, with the high speed access at about 105 Mbps.

At some point, some end users are going to be able to directly compare their experience at 15 Mbps with 100 Mbps or 1,000 Mbps. In many cases, consumers are going to discover they actually do not discern improvements.

Oddly, that might actually retard adoption of gigabit services, where 100 Mbps or 300 Mbps alternatives are available.

Still,  that is going to raise some other issues, as what app providers are going to have to do, as latency becomes the bottleneck, not access bandwidth. If latency performance improves, then a bandwidth boost to hundreds of megabits might actually produce an experience boost.

Europe Competition Commission Decides to File Antitrust Charges Against Google

Europe’s competition commission has decided to file formal charges against Google for violating the European Union’s antitrust laws, the result of a five-year investigation that many will see as analogous to the similar lawsuit faced by Microsoft almost a decade ago.

It is hard to say what will happen next, but Microsoft spent 21 years fighting antitrust regulators, and was seen by many as a turning point for Microsoft. That might someday be said about the EU case against Google as well.

Were Google to lose, the possibly $6 billion fine might be the least of the firm’s problems. The bigger issue would be the decisive break from past operating policies and growth strategies.

The EU has been investigating Google's market dominance for the last five years, and it seems unlikely Google will escape all damage, even if a consent decree “merely” restricts its business freedom.

In the past, such antitrust actions have had serious implications. The former Bell System monopoly in the United States was ended by just such a consent decree, splitting what became AT&T from seven local telephone companies and ending the AT&T telecom monopoly.

One can suggest we are a long ways from a resolution of the case against Google. But it wouldn’t be hard to guess that a “chilling effect” already has occurred, causing Google to move more slowly than it otherwise might have.

Perhaps 60% of This Information about Google Wireless is True

With the caveat that the confidence level is about 60 percent, here is what Android Police believes are features of the coming Google mobile service. 



The app-based service likely will use Sprint and T-Mobile US as suppliers of mobile network connectivity, but will rely on Wi-Fi whenever possible. 



Pricing might have several components, possibly "by the gigabyte" charges for data, with carryover of unused capacity, with separate multimedia text messaging charges. Presumably that is because the wholesale agreements with T-Mobile US and Sprint will require that charging scheme. 



But domestic voice and texting will be included, at no extra charge, with low international calling prices and the ability to use Google Voice ("Hangouts"), if a user already has an account. 



Multiple devices can be supported on one account, and service could be switched between devices without physically changing a subscriber information module. 

Turning Points are Hard to See, But We Might be Nearing One

It once would have been impossible to imagine the computing business without IBM at the top, during the mainframe era. It would have been inconceivable to imagine the minicomputer era without Digital Equipment Corp. at the apex.

Likewise, an industry not lead by Microsoft and Intel during the personal computer era would once have been nearly unthinkable. 

But computing eras change. And while nobody quite knows what to call the coming period--mobile, pervasive, cloud or something else--most believe a new era is arriving. 

If history proves instructive, new leaders are going to emerge. That means names such as Google, Apple, Facebook or Amazon might not be among the industry leaders. 

Such turning points, though, always have happened before. Every era has been lead by different firms. 

To be sure, there is always a chance that the pattern will be broken. 

Apple doesn't quite fit the pattern, but some will argue Apple never lead the personal computing era. 

Still, as impossible as it is to envision a computing era not lead by names such as Google, Facebook, Apple or Amazon, the odds favor new names emerging. 

Architectures and processors always have mattered in the past, so many will look there for new names. But some things really  have changed. 

Google was the first technology leader whose business model was based on advertising. That never has happened before. Based on that precedent-breaking development, one might suggest other business models could be part of the next era. 

Not Enough Competition? Abundance Will Be the Big "Problem" after 2020

While network neutrality is seen by some as protecting Internet “openness,” it does not address the underlying core problem of scarcity, according to Milo Medin, Google Fiber VP. Whether you agree with Medin or not, about openness, you might also agree with him that the decision does not specifically address or promote competition.

It might be true that "no consumers are seeing higher speeds than before the order was passed; no consumers are paying less for their Internet services than what they were paying for; no consumers are seeing higher volume caps that they had before; and no consumers have additional choice of providers than they had before," Medin noted.

All true, as far as it goes, but almost hugely misleading and arguably strategically mistaken. As much of a force as Google Fiber has been at spurring other Internet service providers to invest dramatically faster, Comcast’s recent moves to upgrade  all customer locations to gigabit speeds by the end of 2015, and 2 Gbps for 86 percent of all locations--also by the end of 2015--must be said to dwarf all the other efforts put together.

In fact, some of us now would argue that abundance soon will be the reality for most consumers, sometime after 2020.

Will FCC Allow Massive Merger to Protect Net Neutrality Gains?

Publication of the new Federal Communications Commission mandated network neutrality rules opens the way for court challenges, and the first lawsuit has been filed.

There are many potential ironies. Consider the present situation the FCC faces with respect to the Comcast acquisition of Time Warner Cable. On one hand, since Comcast is upgrading 21 million--virtually all--of its residential locations to gigabit levels of service, plus offering 2 Gbps to 18 million of its customers, Comcast already is the biggest Internet service provider in the United States, with the most gigabit-capable networks.

Adding Time Warner Cable would allow Comcast to extend that lead. Even before that announcement, and before changing the definition of broadband, Comcast arguably is the largest U.S. Internet service provider, and arguably the provider with the greatest share of faster-speed connections.

By about 2007, average advertised cable TV high speed access speeds were 2.5 times the average telco digital subscriber line speeds, while cable peak speeds were three times faster.

The gap since has widened, principally because Comcast is upgrading all its locations to gigabit speeds by the end of 2015, and because more cable operators will be adopting DOCSIS 3.1, which will enable gigabit speeds.

To be sure, many ISPs, including AT&T and CenturyLink, many independent ISPs and Google Fiber, are upgrading to gigabit speeds as well. But those roll-outs are coming neighborhood by neighborhood, and at a measured pace. All will be playing catchup to Comcast.

In other words, Comcast’s share of the gigabit access market will be very high, given its installed base of potential connections (21 million homes), where the other contestants would be lucky to be able to market to hundreds of thousands of homes.

In recent years, cable TV companies also have been getting 83 percent share of net new high speed access connections.  

So if the FCC approves the merger, it will sanction unusually high levels of concentration by one service provider, arguably in the most-crucial product segment of all.

Under normal circumstances, one would be skeptical.

But there is another twist. If the FCC does approve the merger, it could likely win network neutrality agreements from Comcast that would stand, even if the FCC’s network neutrality rules later were struck down.

And some believe the rules will be invalidated. “The FCC may have violated the Constitution’s separation of powers in its attempt to ‘modernize’ the 1934 Communications Act.

By reclassifying broadband as a telecom service and then selectively and arbitrarily forbearing from most of Title II, the agency has effectively rewritten the Act — something only Congress can do through legislation,” said Berin Szoka, President of TechFreedom.

There also will be procedural objections. “The agency failed to open a new comment round after scrapping its initial, more modest proposal, in favor of the President’s Title II plan,” said Szoka.

So might the FCC try to protect some net neutrality gains by sanctioning a merger that will violate most of the market share rules the FCC and Dept. of Justice normally apply when screening and evaluating mergers at the top of telecom markets?

Access Platform Decisions Still are Controversial

Debates about when, how or why to deploy fiber to the home have been relevant for decades. Among the bigger juxtapositions: fiber to the home versus fiber to the curb or fiber to the neighborhood; FTTH versus hybrid fiber coax; and more recently, the value of fixed versus mobile investments.

Those debates were relevant because payback is relevant, and it has been no secret that the FTTH business model has been difficult, especially in competitive markets, and particularly so in markets where there are rival facilities-based competitors.

By about 2020, the challenges will grow worse, as fifth generation mobile networks promise end user bandwidth up to 10 Gbps, with one millisecond latency.

In Vietnam, where perhaps only 1.5 percent of locations have access to FTTH, the Fiber to the Home Council Asia-Pacific has urged service providers to invest heavily.

In addition to retail broadband services, telcos could profit from backhaul bandwidth and connectivity for mobile operators, especially those venturing into Long Term Evolution, said Dr. Bernard Lee, FTTH Council Asia Pacific president.

Some might say it is a bit of over-investment to build a ubiquitous residential network only so that network can be used for mobile backhaul.

With so much changing in the access business, statistics alone will not drive business investment decisions.

When more access, at higher speed, is required, service providers will look at all the ways platforms can be deployed, the cost, timetable and also revenue implications of doing so.

In most markets, ubiquitous fiber to home might not be the wise choice. Mobile operators have joined cable TV operators in making that argument. And Verizon seems now almost to regret having made that choice.