by Sean Buckley
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Google Fiber's (NASDAQ: GOOG) 1 Gbps fiber-to-the-premises (FTTP) service may only be available in two markets, but it has had a rippling effect in the telecom industry.
A growing host of traditional ILECs, municipal providers and even cable MSOs are now either offering service or have stated plans to launch services during the past year and more will likely follow.
Besides changing how consumers and service providers think about broadband service, Google set a major pricing benchmark: a standalone Gigabit symmetrical service is $70, while a 1 Gbps data and TV bundle is $120 a month. This is a compelling proposition when you consider that Comcast offers a double play bundle for $89.99 a month for a promotional 12-month period.
Pricing for 1 Gbps service varies widely by service providers across ILECs, cable and municipal providers:
ILECs: Led by AT&T (NYSE: T) and CenturyLink (NYSE: CTL), the ILEC sector has set some rather ambitious targets for their proposed FTTP plans. Following the launch of its service in Austin, Texas, in 2013, AT&T announced earlier this year that it identified up to 100 cities and municipalities nationwide, including 21 new major metro areas, for its new wave of expansion. What's more, AT&T said that upon approval of its proposed acquisition of DirecTV (NASDAQ: DTV), it will expand the GigaPower service to an additional 2 million customer locations. Following Google's lead, AT&T is offering $70 a month plan in Austin, but customers have to agree to have their Internet searches tracked by the telco. It has not revealed pricing in the other areas of expansion.
Feeling satisfied with the results it had in Omaha and Las Vegas, CenturyLink hatched a plan to bring the 1 Gbps service to 16 metro areas during the next year. For the first two markets where it offers the service, including Omaha and Las Vegas, consumers can get a standalone data service for $150 or $80 as part of a triple-play bundle. Interestingly, Verizon (NYSE: VZ) has yet to jump into the 1 Gbps arena, but now offers symmetrical speeds across of its FiOS speed tiers from 25 Mbps to 500 Mbps for both residential and business customers.
But large telcos are only one part of the overall 1 Gig FTTP equations. A growing number of regional and rural ILECs such as Canby Telcom, Cincinnati Bell, Comporium, GVTC, TDS and Vermontel are extending 1 Gbps service to their customer bases. At the higher end of the scale is GVTC, a rural telephone cooperative that has priced its residential 1 Gbps service offering at $299.95 a month. However, the majority of independent telcos' 1 Gbps service prices range from $50 to $100 a month: Canby Telcom ($50), Cincinnati Bell ($90), Comporium ($100) and TDS Telecom ($100). But if you're looking for the cheapest 1 Gbps service, Vermontel beats everyone to the punch with a $35 a month offering.
Cable Operators: Cable may have been initially dismissive of the 1 Gbps opportunities, but it's clear that they are now heeding the call. The cable effort is being highlighted by the proposed efforts of Cox Communications. In April, the cable MSO announced that it would launch a 1 Gbps service later this year, challenging telco competitor CenturyLink in Las Vegas, Omaha and Phoenix.
While the large cable MSOs will get the most attention for their entry into the 1 Gig race, a number of regional cable providers are further along. Looking to pose an even bigger challenge to incumbent telco AT&T, Grande has set a plan to make its FTTP service available to about a quarter of the cable provider's existing 75,000 Austin customers for $65 a month without a contract. Other players such as Atlantic Broadband, GCI and Suddenlink have also announced plans to offer 1 Gbps service, but have yet to reveal pricing.
Municipalities: While the municipal broadband movement has existed for over a decade, it was Chattanooga, Tenn.-based EPB that caught the telecom industry's attention as a catalyst for the 1 Gbps movement. Like Google Fiber, they are also pricing their service at $70 a month. Even in the face of emerging state laws banning or putting limits on creating municipal networks, more communities like Wilson, N.C., and Lafayette, La., are launching their own 1 Gbps-capable networks, offering fiber-based services for $155 and $110 a month, respectively.
In this special report, we chronicle the activity in the 1 Gbps FTTP movement and the pricing trends being driven by each industry segment.