U.S. operator Altice USA quietly revealed a plan to slash its cable broadband upload speeds anywhere from 30% to 86% in July, a shift the company said was intended to bring its offering more in line with competitors.
From July 12, upstream speeds on Altice USA’s bottom-tier plan offering 100 Mbps download rates will drop from 35 Mbps to 5 Mbps. Uplink speeds on its next two plans offering 200 Mbps and 300 Mbps in the downlink will drop from a 35 Mbps uplink to 10 Mbps and 20 Mbps, respectively. Its Optimum 400 plan will see upstream speeds cut in half from 40 Mbps to 20 Mbps, while its top tier 1- Gig plan will slash the uplink from 50 Mbps to 35 Mbps.
An Altice USA representative told Fierce the change will only affect new customers and existing customers who make changes to their service after the effective date. Responding to a question about whether the move was designed to alleviate network congestion, the representative insisted its network “continues to perform very well despite the significant data usage increases during the pandemic” and said the new speeds “are in-line with other ISPs and aligned with the industry.”
The representative was quick to point out Altice USA offers “symmetrical speeds over our new 100% fiber network” which is currently available to more than 1 million homes, adding it was “hyper focused” on expanding that network.
Indeed, Altice USA has talked up its fiber expansion plan, with CEO Dexter Goei stating on its Q1 2021 earnings call it was on track to pass 500,000 new homes this year. During an investor conference, he added it was aiming to introduce a 10 Gbps fiber speed tier in 2022.
On the surface, the move seems to fly in the face of recent commentary from broadband executives about the growing importance of upload speeds. AT&T executives repeatedly stressed this point in a series of recent investor events, with CFO Pascal Desroches calling uplink speeds “really critical” and SVP of Wireless Technology Igal Elbaz stating “the uplink growth in data is growing at a higher rate than the downlink pace.”
This isn’t lost on Goei, who on the aforementioned earnings call said “customers are increasingly appreciating higher upload speeds” when explaining why its fiber product is receiving higher customer satisfaction ratings than cable.
While the uplink has historically accounted for just 10% of operator traffic flow, analysts at New Street Research noted in a recent presentation that data from AT&T showed this increased to 12% following the start of the pandemic and is expected to climb to 20% in the coming years.
“As the mix of traffic shifts to the upstream, consumers may start to focus more on upstream speeds giving fiber providers the advantage,” they said.
Jeff Heynen, VP of Broadband Access and Home Networking at Dell’Oro Group, told Fierce that if Altice USA is being honest about its network performance “then the only reason to do this is to push customers who absolutely need the higher upload speeds into more expensive bandwidth tiers.”
“This is exactly what other cable operators have done—limit upload speeds and then push customers who need 20 Mbps+ uploads to their more expensive tiers,” he said.
Recon Analytics founder Roger Entner agreed Altice USA’s speed drop “looks like a marketing move” and “makes their fiber a lot more attractive.” But he also said customers will likely do just fine with the lower uplink speeds, noting during a recent trip to Germany when he only had broadband service offering 50 Mbps down and 10 Mbps up “I was surprised myself how little a difference I felt on a day-to-day basis.”
Still, he said Altice USA should expect customer backlash. “Every time you reduce something, take something away from people there’s a backlash. It doesn’t matter if they need it or not,” he explained.
Heynen came to a similar conclusion: “Does Altice risk losing subscribers to FiOS, which is the most formidable competitor in the region? Absolutely. But I’ll bet Altice has done the math and found that even an above-average churn rate because of this decision will be more than offset by the increase in revenue they will see as subscribers switch to higher-speed tiers.”