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Summary:

I hope broadband competition in the New York City area is the wave of the future. The region, which is densely populated, has three Internet service providers vying for customers. And since Time Warner Cable announced yesterday that it will deploy DOCSIS 3.0 to the city, […]

I hope broadband competition in the New York City area is the wave of the future. The region, which is densely populated, has three Internet service providers vying for customers. And since Time Warner Cable announced yesterday that it will deploy DOCSIS 3.0 to the city, the area also will soon have competing super-fast broadband offerings from all three providers. Verizon touts its FiOS service there, and Cablevision already offers DOCSIS 3.0 and just launched speeds of 101 Mbps to Long Island residents.

A lot has been written about the merits of Verizon’s fiber to the home vs. AT&T’s fiber to the node and U-verse services, but we haven’t spent a lot of time on DOCSIS 3.0 deployments. Sure, it will provide ultrafast broadband, such as the 101 Mbps services that Cablevision is offering or the 50 Mbps that Comcast boasts. But for providers, the upgrade makes a tremendous amount of sense for business reasons beyond happy customers — so much so, that 45 percent of the country will have access to D3 rollouts by the end of this year, according to data from research firm Pike & Fisher. (See chart for provider details.)

Given that the average  residential customer doesn’t currently need 50 Mbps down, and likely won’t spend $140 a month to get it, why are cable companies doing it? First off, the rollouts are cheap. Cablevision has said it costs it about $70 per home to deploy DOCSIS 3.0. Tim McElgunn, chief analyst at Pike & Fisher, estimated that it generally costs about $100 per home to deploy, or a few billion to upgrade across a cable company. Verizon is spending $23 billion to deploy FiOS, and general estimates are that it costs about $1,000 per home to deploy.

For a relatively small investment, cable providers get upgraded to a faster service that has benefits such as IPv6 addressing capabilities. They also can offer fiber-like speeds to business customers without spending more money to deploy fiber. Cable providers have seen growth in residential services stay relatively flat, so they’re looking to business access and interactive advertising to grow. D3 doesn’t really affect advertising, but it is an attractive offer to dangle in front of corporate users.

d3chart

Chart courtesy of Pike & Fisher.

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  1. Don Jones – VentureDeal Thursday, April 30, 2009

    I have the new Comcast 50 Mb per second service and it is great. Speed is good!

  2. With 50+ Mbps of data available, the cable data pipe becomes more than enough to handle all our media needs. Why should we pay the cable company for their channel distribution services, then, when we can get almost all our television services over the web via Hulu, downloaded via iTunes or Amazon, and streamed via Neflix over Tivo or Roku. Mass TV market dwellers can also pull the network watercooler shows, news and sporting events in over the air in HD. I’m glad to see cable stepping up to the plate and striving to win the bandwidth game. It will be interesting to see how they handle the effect the extra bandwidth has on subscription to their channel distribution services. I can envision their response becoming very anti-competitive. Nevertheless, I think this is the right play for them. They have the most to lose if the telcos with fiber to the DSLAM, FTTH and FTTN beats them to the punch.

  3. Nice to read that competition is picking up. But how does the building of fiber work in the US? It sounds like building owners let ISPs build the networks to the home, and give the ISP a monopoly on that cable. Why don’t the building owners build the network and make the cables open to competition. Then you would have an unlimited number of competitors that can offer internet, voip, tv etc.

  4. Gadget Sleuth Friday, May 1, 2009

    I wish Comcast would do this a little faster already…the Sacramento area needs 50mps down!

  5. Cablecos Look to Businesses for Growth Friday, May 1, 2009

    [...] Only about 10 percent of 600 participants in a survey conducted by Pike & Fisher said they were willing to pay more than what they already spend for Internet service. This is despite a third of them ranking Internet access as the most important discretionary item in their budgets — and the service they’re least likely to cut. These results complement findings last year that price will be a big driver in winning over consumers to telco TV. So with residential markets apparently tapped out, most providers are looking at businesses. [...]

  6. DOCSIS 3.0: Coming Soon to a Cableco Near You Saturday, May 2, 2009

    [...] May 2nd, 2009 · No Comments I hope broadband competition in the New York City area is the wave of the future.Complete info at Gigaom. [...]

  7. Cox Offers 50 Mbps Broadband. It Ain’t Cheap Tuesday, May 5, 2009

    [...] in parts of New York. Cox is among a growing list of cable broadband providers that are using DOCSIS 3.0 to compete with Verizon’s FiOS assault. Like most of its peers, Cox is selectively rolling [...]

  8. Cox Offers 50 Mbps Broadband. It Ain’t Cheap [GigaOM] | BYOHosting.com Blogs Tuesday, May 5, 2009

    [...] in parts of New York. Cox is among a growing list of cable broadband providers that are using DOCSIS 3.0 to compete with Verizon’s FiOS assault. Like most of its peers, Cox is selectively rolling [...]

  9. U.S. Broadband- A Call to Arms Thursday, May 7, 2009

    [...] providers seem to be in the news every week for one reason or another, but an important issue is arising in New York:  companies are finding they have to compete with each other for customers, which really just [...]

  10. DOCSIS 3.0: Coming Soon to a Cableco Near You Friday, May 8, 2009

    [...] DOCSIS 3.0: Coming Soon to a Cableco Near You. [...]

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