Google Fiber's (Nasdaq: GOOG) 1 Gbps Fiber to the Home (FTTH) initiative is still in an embryonic state, but it's clearly having an effect on how other service providers price and package their broadband offerings.
Besides the speed, the other disruptive element in Google Fiber is pricing: A standalone data service costs $70 per month, while a bundle of data and video costs about $120.
Offering bargain broadband prices has rubbed off on two municipal FTTH providers--UTOPIA and Chattanooga, Tenn.-based EPB Fiber, which both announced this week that they were reducing their 1 Gbps prices.
UTOPIA's open access provider partners--including Beehive Broadband, Brigham.net, InfoWest, SumoFiber, Veracity Networks, WebWave and XMission--will now offer the service for $65, down from the $299 it initially charged.
In addition to cutting the service fee from $299 to $70 for the 1 Gbps speed tier, it is upping the speeds of any subscriber with a 100 Mbps tier to 1 Gbps, while those with a 50 Mbps service will be bumped to 100 Mbps. Being part of an electric utility, the FTTH network can also be used to proactively monitor the electricity service.
Google Fiber may get credit for 1 Gbps, but it was really EPB Fiber that began the 1 Gbps revolution in 2010.
"When we first introduced gigabit services, we couldn't find a relevant example of pricing as a guiding model because it hadn't been done before in this country, so we started with what we thought was a reasonable price considering the cost risk of offering that much bandwidth," said Danna Bailey, a spokeswoman for EPB Fiber, in an interview with FierceTelecom. "Then we watched and learned."
A number of other countries including New Zealand are citing EPB Fiber as a model to use in rolling out higher-speed tiers for their communities.
All of these higher-speed moves are also driving the major telcos and cable MSOs to respond. However, their higher-speed tiers come with larger price tags.
Out of the three largest telcos, AT&T (NYSE: T) and CenturyLink (NYSE: CTL) have been the most vocal about 1 Gbps.
CenturyLink is conducting a network pilot in Omaha, Neb., leveraging fiber from an existing HFC deployment made by predecessor US West. Eligible customers will have to pay $150 for a standalone data service and $80 when they purchase a triple play bundle.
Stopping short of revealing any potential expansion plans, Stewart Ewing, CFO of CenturyLink, said during the recent Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference that the company is going to use Omaha as a model it could replicate in other markets.
AT&T, while giving little details about its plans, announced it would conduct a 1 Gbps service trial at some point in Austin only hours after Google Fiber cited the city as one of its destinations. The telco later said its move was already on its own drawing board.
Then, there's Verizon (NYSE: VZ). As a follow-up to their 300/65 Quantum tier, the telco recently introduced 500 Mbps service. Those lucky enough to live in an area where FiOS is available will be able to get a standalone data service for $309.99 or a triple-play bundle for $329.99 as part of a two-year agreement.
Cable MSOs, while still questioning the need for a 1 Gbps speed tier, are not standing pat.
Comcast (Nasdaq: CMCSA) now offers a 505/100 Mbps tier over its metro Ethernet-based FTTH network in select Northeastern cities. Like its 305 Mbps tier point-to-point offering, the 505 Mbps tier emerged not long after Verizon made its upgrade. Buyers should be aware of the $399 per month price tag and the $1,000 early termination fee.
In the Provo, Utah market, reports emerged that Comcast would offer a 250 Mbps tier for $70 to battle Google Fiber. This move was likely a response to Google Fiber's purchase of the iProvo network, over which it would offer its Gbps FTTH service.
A 1 Gbps connection won't appeal to every user, but what's clear is that Google Fiber and other municipal-based providers are shaking up the way the telecom and cable industry thinks about the value of a broadband service.--Sean
Updated article on September 23 with correct speeds for Comcast's 505/100 Mbps service.