Broadband Buffet: Last Call for Consumers?
Get ready for the next generation of fiber coming to the home, delivering 10 Gbps downlink and 2.5 Gbps uplink, shared among 32 locations. Verizon will announce next year that its labs have achieved a huge improvement over the 2.5 Gbps down and 1.2 Gbps up that the company is currently deploying. But get ready to dig deeper into your wallet, too. Even if demand for broadband isn't breaking the Internet, it's surely forcing ISPs to rethink how they charge for such a valuable service—even Verizon. While many ISPs are implementing caps or tiers because they face resource constraints at points in their network—Comcast's 250-GB-per-month cap, for example, is aimed at stopping folks from unduly clogging its shared, last-mile networks—some carriers are eying such measures as a source of additional revenue and as a way to fend off potential competition from online video.The best example of this is Time Warner Cable's tiered-broadband plan, which ignited so much consumer ire that the company ended up backing down. However, when Verizon Chief Technology Officer Dick Lynch said in September that Verizon was also in favor of some kind of consumption-based billing, it was kind of like watching your favorite indie rocker sell out. Why would Verizon, which is building out a fiber-to-the-home network, plan to eventually move to some sort of consumption model? Verizon FiOS: Upgradable for decadesThe answer is: because it can. I spoke about the FiOS network with Brian Whitton, executive director of access technologies at Verizon, in an effort to clarify the rumor that even Verizon would eventually face constraints under the onslaught of video. Whitton quickly disabused me of that notion, pointing out that the network is built to be upgradable for decades to come merely by replacing electronics at the ends of the pipe. Whitton told me that Verizon hadn't spent $18 billion (expenditures totaled $23 billion, but some of that would have been spent in any event) to upgrade its network, only to rip it out a few years later. He explained how the fiber stretches from the customer's home all the way back to the fiber-based long-haul network. Whitton did acknowledge how valuable broadband has become—precious enough that people will pay for premium access to it, especially those using up a disproportionate amount of network assets. "Ultimately this is the fairest cost-recovery model, and with a tiering plan or a meter everyone is paying their fair shares to finance the network," Whitton said.Unlike other ISPs, Verizon doesn't view heavy bandwidth users as hogs, but it does view them as potentially high-end customers. What's frustrating consumers is that because of the fragmented nature of competition in U.S. broadband markets, providers offering consumption-based plans don't face the competition that would help keep prices in check. Most places have two providers that offer slightly different sets of services and plans, making it hard to compare prices. I don't mind paying more for a better network (I do so for my cell phone), but most consumers lack that option when it comes to wired access. Comcast—which competes against Verizon in about 12% of its footprint—is rolling out faster broadband to ensure that customers don't leave the cable provider for Verizon's fiber. But in other areas of the country, such as here in Austin, Tex., folks must choose between DSL (with some U-verse) and cable that hasn't been upgraded to the faster DOCSIS 3.0 speeds. So while Verizon's FiOS will deliver faster service to customers as it implements consumption-based billing of some sort, there's no meaningful competition to keep its pricing in check for those who have a need for speed. Eventually, we'll all need it.
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