Broadband speed creep
AT&T and Verizon both are nudging up broadband speeds in conjunction with a range of promotions apparently aimed at giving a last-minute push to their second-quarter numbers while also chasing customers hard at a time when seasonal moving patterns offer a chance to gain or lose market share.
This morning, Verizon is offering a slew of promotions, including free netbooks and camcorders for bundled service customers. (It’s also adding local content in the New York area). And the carrier also is upping its speeds: from 10 to 15 Mb/s and from 20 to 25 Mb/s. And for New York-area customers who bundle, the new entry-level speed is 25 Mb/s and the middle tier is 35 Mb/s.
The announcement comes a week after AT&T offered a string of enticements for U-verse customers, including a free upgrade of its 10 Mb/s broadband customers to 12 Mb/s.
Both moves come as rivals such as Comcast and Cox Communications continue to roll out faster speeds with DOCSIS 3.0 upgrades. This month, Comcast cut its price for 50 Mb/s service to below $100 in some markets such as Washington, D.C., for customers who sign up for a double play.
Verizon has long been boasting that it has the ammunition to win a speed war, but it doesn’t want to spend all that ammunition sooner than necessary. The company has been trialing 100 Mb/s service for more than a year, hinting at the end of 2008 about 100 Mb/s capabilities maturing as soon as this year.
In this economy, however, speed alone isn’t enough to lure customers, and competition isn’t just about speed, but a complex value equation that includes factors like rebates, bundles, free hardware and wireless broadband offerings. At the start of this quarter, Verizon offered a $150 rebate with two-year triple-play contracts, and Cablevision followed a few weeks later, offering a $200 American Express gift card to new double-play and triple-play customers who agree to stay on for four months. Both offers expire this month, in time for customers to boost each company’s second-quarter numbers.
Qwest Communications, meanwhile, has been arguing that service quality, not speed, will be the basis on which it competes for broadband customers — despite the fact that unlike AT&T or Verizon, it relies entirely on partners for the wireless and video elements of its bundle. Behind the scenes, however, the carrier is trialing VDSL2 technology as a means of potentially offering 40 Mb/s rather than 20 Mb/s speeds, which could take some of the power out of cable’s 50 Mb/s offerings.
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