According to their research, cable companies have about 47.5 million broadband subscribers, while the remainder are with the phone companies. Cable companies added about 800,000 new subscribers, about 72 percent of the total for the month. The top two phone companies — AT&T and Verizon — saw a decline of 696,000 DSL accounts but added a total of 919,000 fiber subscribers. FIber-based broadband now accounts for about 40 percent of AT&T and Verizon’s total broadband customer base.

Bruce Leichtman, president and principal analyst for Leichtman Research Group, pointed out that typically the first quarter is better than the second and third quarters of the year, and “2013 began with another strong first quarter.” Net broadband additions in Q1 2013 were about 500,000 more than in Q4 2012, and that bodes well for rest of the year.

A resurgent housing market and stronger economy along with our growing need for speed and connectivity are the reasons why demand for U.S. broadband is booming. Here are some numbers to give you an idea as to who is winning and who is losing.

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Despite the love people have for email, Twitter and even Facebook, the real star of the web in terms of sheer traffic is video. And not only is all this real-time video streaming possibly rotting our brains, congesting our broadband networks and threatening our pay TV businesses, it’s driving wholesale changes in how we pay for broadband and the future of television.

A great illustration of these changes comes from Sandvine’s Global Internet Phenomena Report: 1H 2013. Sandvine provides deep packet inspection and networking management tools to wireless and wireline ISPs, which is how it gets some of its data. While, many people already knew that Netflix traffic comprises about a third of the web traffic in the U.S., they might not know that YouTube is gaining rapidly with 17.11 percent of web traffic downloaded on wireline networks, up from 13.8 percent a year ago.

Video makes bandwidth hogs of us all

Few people are immune to the siren song of cat videos or Arrested Development. In fact, it’s changing the profile of what broadband usage looks like to the point where it’s normal to be a bandwidth hog. According to the Sandvine report in North America, the top 1 percent of subscribers who make the heaviest use of the network’s downstream resources account for 10.1 percent of downstream traffic.

However, those top 1 percent of users don’t look too much different from the top 30 percent. At the bottom, the network’s lightest 50 percent of users account for only 6.4 percent of total monthly traffic. In fact it’s those laggards at the bottom we should be worried about. Did they somehow miss Gangnam Style?

The average and median usage on both wireline and wireless networks in North America is on the rise. On wireline networks mean usage was 44.7 GB, a 39 percent year-over-year increase from 32.1 GB. Over the same period, median monthly usage increased at an even by 56.5 percent, jumping from 10.3 GB to 18.2 GB. On mobile networks mean monthly usage increased by 25 percent from 312.8 MB to 390.1 MB. Yet, median usage more than doubled from 25.5MB to 58.7 MB over the past year, driven in part by more people buying smartphones.

And mobile is even bigger than these numbers make it look like (or something like that). One out of every five bits — or 20 percent of the traffic on wireline network is generated by a smartphone or a tablet. And as Wi-Fi expands and is easier to connect too, that number should continue to increase.

Yes, video traffic will always be big, because videos are big

Before people accuse me of being unfair, let me note that sending video is one of the most data heavy options around. A two-hour HD movie file can contain 4GB of data or more, while a book that might also take two hours to read would top out at several megabytes.

The sheer volume of data is one reason video strikes fear into the hearts of both wireless and wireline network operators, while the loss of revenue from pay TV subscriptions keeps wireline providers up at night. Unfortunately for those implementing usage-based billing plans perhaps in hopes of influencing subscribers to keep their pay TV subscriptions, Sandvine shows that real-time entertainment usage goes up on networks with usage-based billing. In fact, the only thing reduced appears to be file-sharing traffic.

The rest of the report is chock full of great data such as this tidbit that confirms North America’s love of Apple products:

So what single home roaming device consumes the most Real-Time Entertainment traffic at over 10percent? It’s the iPad. In fact, Apple devices as a whole play a large role in the consumption of Real-Time Entertainment. If you add up all Apple manufactured devices (which includes iPads, iPhones, iPods, AppleTVs, and Mac computers), they consume over 35% of all streaming audio and video on North America fixed access networks.

There’s also some good data from Europe that shows that the lowered availability of over the top options like Netflix or the BBC’s video player cause the amount of real-time streaming traffic to drop. Additionally the report shows that in Europe file sharing is higher than in North America, something the report’s authors attribute to a lack of access to certain popular content because of geo-blocking.

But taken in its 40-page entirety, the data and case studies show how our love of video is causing both wireline and wireless ISPs to get creative to boost revenue and meet the challenges posed by the demand for video. Just like we said it would.

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A spokeswoman confirmed the outage, but had few details:

“We are currently experiencing a disruption with our Internet service. We are working with our vendors to restore service as soon as possible and apologize for any inconvenience this has caused our customers. We will continue to work towards resolution until all issues are resolved.”

Earlier this year in January, AT&T experienced a substantial service outage affecting thousands of its customers, and lasting for a few days. The culprit in that outage was a software update that affected some, but not all of AT&T’s 7.4 million U-verse subscribers.

While power outages, fiber cuts and even software updates can take out a subscriber’s broadband for a bit, nationwide outages are rare. Maybe tomorrow on its earnings call, CenturyLink will explain what happened to cause this one. Meanwhile, a mobile hotspot or event a project like the recently launched BRCK, would come in handy right now for CenturyLink’s subscribers.

Updated 12:20pm: A CenturyLink representative said all service has been restored as of around midday Pacific Time.

Updated at 1:20 pm: CenturyLink said it has identified the cause of the outage as a problem with its core routers, but is investigating the problem further.

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From the Washington Post article:

“What Aereo is doing to bring broadcast signals to its customers is interesting,” Time Warner Cable chief executive Glenn Britt said in an interview with The Washington Post. “If it is found legal, we could conceivably use similar technology.”

That’s a big admission from Britt, and illustrates both how rapidly the internet is changing the television industry. But what would be an even bigger admission would be if Britt would consider delivering that public broadcast package beyond its existing subscriber base.

A modest proposal

In short, would Britt be willing to break the unspoken agreement that has kept the telcos and cable providers from infringing on each other’s turfs even as IP technology has made it possible for them to deliver their TV packages over the top?

If Time Warner Cable were to implement an Aereo-like business model and offer it to anyone, it might hurt Aereo but it would set off a war between the telcos and cable companies to deliver their services over the top. In many cases, the technology isn’t stopping this revolution, but the business implications would give them pause.

If Comcast’s Xfinity service were available everywhere and so were Verizon’s FiOS packages, then pay TV will have been decoupled from the entwork. All you would be left with are dumb pipes and whole lot of companies offering to provide the same channels of television. Would we need 20 “premium cable offerings?”

My hunch is no, which would have trickle down effects on the money the networks make as well as hasten the rise of a la carte pay TV packages, or even simply paying for a show. However, all of this speculation is premature as Britt cushioned his statements by telling the Washington Post that his company is only watching Aereo’s legal battle and that it doesn’t have concrete plans.

Taking action on this sort of talk would hugely piss off the broadcasters that own some of the channels that Time Warner Cable depends on to keep its subscribers happy, and may just be a feint in the ongoing fight between cable providers and content companies about retransmission fees.

Back in the real world

But Britt is clearly a fan of shaking things up. Unlike many ISPs that view Netflix as a threat to their triple play bundle, Time Warner Cable sends out advertisements touting Netflix as a reason to upgrade broadband speeds. He’s also letting consumers stream live TV to their Roku boxes with a Time Warner Subscription (that might come in handy should it elect to make an Aereo-style over the top offering). And he’s also been more vocal about the need for more flexible packages of channels for consumers.

He reiterated that to the Washington Post:

“The structure needs more flexibility,” Britt said. A customer shouldn’t have to pay for less popular channels like VH1 Honors in order to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”

It’s better to keep a customer paying you something, rather than decamping because they don’t want to pay for a $150 cable bill. Britt seems to get that, and wants to find a middle ground before the internet and over the top TV offerings take that ground out from under his feet. I wonder if he’s willing to take it even further.

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CenturyLink is upgrading its existing fiber architecture in west Omaha using GPON and will serve homes and businesses. Residential customers can bundle the gigabit speeds with existing video and voice service for $79.95 or subscribe to standalone service for $149.95. CenturyLink competes against Cox Cable in Omaha, which offers a 150 Mbps service.

This is a pilot project for the telco, and will cover its 48,000 customers in Omaha. When I asked CenturyLink why it was upgrading to a gigabit, a spokeswoman emailed the following:

CenturyLink needed to upgrade its existing fiber architecture in Omaha and wanted to create a more robust network that delivers fiber optic cable directly to homes and businesses. …We will evaluate our 1 Gbps offer to determine further deployment of this advanced technology.

Better broadband = More innovation

As a broadband reporter with a passionate belief that more broadband is better for our society and our ability to innovate, I’m thrilled to see more and more companies testing the waters on speed upgrades.

When Google launched its roll-out plans to build out a gigabit network in Kansas City, it showed that it was willing to enter a capital-intensive business in order to protect its access to the consumer. At that time, ISPs were implementing caps and making a lot of noise about bandwidth hogs and the cost to upgrade networks for people watching video over the top.

Yet, after Google announced Austin, Texas in April as its second location for Google Fiber, AT&T issued a press release saying it too wanted to use Google’s tactics to lay fiber to the home in Austin. It remains to be seen if AT&T takes those steps, but it’s great to see AT&T considering it. A week after Austin, Google said it purchased the fiber network in Provo, Utah (it apparently cost Google $1) and planned to turn on a gigabit network later this year. In Kansas City, Google charges $70 for gigabit-only service and $120 for a gigabit plus TV.

Municipalities and smaller telcos are also getting in the game. Last Friday I covered Vermont’s telco, VTel, and its existing gigabit network that residents can connect to for $35 a month. In a talk with the CEO of VTel, he told me that the he thinks that gigabit fiber is the only way to bring residents and his business into the future. But his $151 million investment costs were offset by $94 million in government loans and grants.

Meanwhile, Century Link isn’t totally throwing its conservative talking points to the wind. In the release announcing the gigabit construction it added a note of caution:

The company will evaluate its Omaha 1 Gbps offer before determining further deployment of this advanced technology, considering such factors as positive community support, competitive parity in the marketplace and the ability to earn a reasonable return on its investment.

I’m curious about all of those things myself. If a traditional telco can invest in gigabit networks and charge a fair rate for them, then I’ll expect to see them pop up in more places. And not just in places targeted by Google.

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It turns out that between the first of this year and April 8 (when I got the data from Ookla) roughly one in 10,000 devices in the U.S. are surfing at gigabit speeds and roughly 1 in 5,000 homes worldwide can match them. Ookla runs the popular Speedtest.Net service and got this data from users who tested their connections during that time period.

Unfortunately, the data on this is relatively inexact, because the art of measuring a gigabit is complicated. As late as last summer when Google launched the first plans for a fiber to the home buildout in Kansas City, the search giant had to work with Ookla to upgrade the test to even be able to read a gigabit. Even so, some customers with a gigabit might not show up because their Wi-Fi routers or computers can’t achieve those speeds and, thus, throttle them back to a mere 100 Mbps or so.

And the numbers provided by Ookla actually measure customers with speeds of above 800 Mbps, which is what it classifies as a gigabit. In the U.S. only 4,110 people have test results at that speed out of 45,468,731 people who used the Ookla tests. Globally, 34,721 users have speeds that high out of 224,404,945 tests. But, clearly not every broadband user is running Speedtest.net or has the right equipment.

Ookla also provides data on the number of people whose connection speeds are 300 Mbps or greater. In the U.S. this was about 51,100 devices or about 11 in every ten thousand users. Globally it was 204,315 devices or 9 in every 10,000 users.

For additional data points, we can turn to the Fiber to the Home Council, which said a few weeks ago that 640,000 subscribers are buying connections of 100 Mbps or more across North America. That’s a significant number, although the FTTH Council is measuring capacity that is 10 times less than what a gigabit connection can offer. For reference, the FCC in February noted that the average U.S. subscribed broadband speed is now 15.6 Mbps, representing an average annualized speed increase of about 20 percent. And below is a chart from FCC data at the end of 2011 showing the distribution of broadband speeds at the time.

This chart measures both wireless and wireline speeds as of Dec. 2011.

But it looks like the FTTH Council — as well as Google’s experience in getting 90 percent of the neighborhoods in Kansas City signed up for fiber — can tell us something definitive about gigabit connections: People want them. When fiber-to-the home is offered 44.8 percent of the homes passed take the service. Given that those are generally the most expensive connections, that’s a pretty high take rate.

So it looks like even a few thousand Kansas City, Austin, Texas or Provo, Utah homes connected via Google Fiber will not only significantly change the percentage of gigabit customers in the U.S. but also around the globe. Still, we have to start somewhere.

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Here are some broadband highlights for the fourth quarter of 2012 from Akamai’s official press release

• Quarter-over-quarter, the global average connection speed rose 5 percent to 2.9 Mbps
• On a year-over-year basis, average connection speeds grew by 25 percent. South Korea had an average speed of 14 Mbps while Japan came in second with 10.8 Mbps and the U.S. came in the eighth spot with 7.4 Mbps.
• Year-over-year, global average peak connection speeds once again demonstrated significant improvement, rising 35 percent. Hong Kong came in first with peak speed of 57.5 Mbps while South Korea came in at 49.3 Mbps. The United States came in 13th at 31.5 Mbps.
• Global broadband adoption rates are closer to 42 percent while high broadband (higher than 10 Mbps) adoption rates are at 11 percent. In South Korea, nearly 49 percent of connections qualify as high-broadband, followed by Japan with 39 percent and the U.S. at 19 percent. South Korea has 86 percent broadband penetration, while the U.S. stands at 64 percent.
• The average connection speeds on surveyed mobile networks ranged from just over 8.0 Mbps to 345 kbps.
• Ericsson, which partners with Akamai, said that mobile data traffic doubled from the fourth quarter of 2011 to the fourth quarter of 2012. It was up a whopping 28 percent between the third and fourth quarter of 2012.
• In Europe, Romania lead the charts with a fourth quarter average peak connection speed of 42.6 Mbps, followed by Switzerland with 34.2 Mbps and Belgium at 33.4 Mbps. In comparison, Hong Kong average peak connection clocked in at 57.5 Mbps.
• About 23 percent of Swiss connections are 10 Mbps or higher, followed by Netherlands which has 21 percent high-broadband adoption rate, just ahead of Sweden with 19 percent.

Here is a look at the U.S. broadband scenario.

• Vermont is the fastest state with average connection speed of 10.8 Mbps, followed by Delaware with 10.6 Mbps.
• Akamai said that the average peak connection speed increased by 1.7 percent in the fourth quarter of 2012 to 43.1 Mbps, with Vermont again topping the charts with 41.4 Mbps.
• When it comes to high-broadband, nearly 34 percent of broadband connections in New Hampshire are above 10 Mbps, followed by Washington D.C. with 33 percent and New Jersey, also at 33 percent. Thanks to the presence of Verizon FiOS, New Jersey saw a 12 percent quarter over quarter growth in high-broadband connections.
• In terms of broadband adoption, Delaware is tops with 87 percent of its connections faster than 4 Mbps, followed by New Hampshire (87 percent) and Rhode Island (83 percent.)

As you might have noticed: if you are a small country (or a smaller state), you can have really high broadband adoption because it is easier to build out your broadband infrastructure. Of course, it also helps if there are people willing to spend money on this stuff.

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Google last week at the Broadband Communities Magazine’s Summit in Dallas told attendees “don’t wait for us” or even the Federal government to bring broadband to communities. “You have to take action, make changes, be creative,” said Milo Medin, Google Vice President for Access Services.  “Your community can have a gigabit future if you want it badly enough”

So rather than Mountain View, Calif., maybe communities should be looking closer to home for broadband love from mini-Googles.

The mini-Google model for community broadband

People often ask what Google gets out of building these networks. They forget that Google is in the online ad business as well as several other ventures that collectively generate more revenue as gigabit Web surfing increases. It’s likely a safe bet that Google is driven more by these businesses’ needs than the desire to be a national service provider. For now.

Rather than “What does Google get?” smart communities need to ask, “Are there other companies whose businesses would benefit from faster, better broadband? Companies that benefit to the point where investing in community networks make sound business sense? Maybe some of these potential “mini-Googles” are local.

San Leandro, Calif. has its hometown Google, OSIsoft. Similar to Google, OSIsoft is a tech company that is building fiber infrastructure to bring gigabit service to a town that definitely wants and needs broadband. Broadband service is not OSIsoft’s core business. Yet, as a San Leandro-based company, OSIsoft benefits tremendously from delivering a gigabit to its neighbors as well as itself.

A couple of years ago OSIsoft was in a bind. The $250 million company had been a member of the San Leandro community for over 30 years. Dr. Patrick Kennedy, OSIsoft’s founder and CEO, as well as many of his 800 employees live in the city. But the company needed a few hundred megabits faster broadband than the incumbents were willing to deliver to the town, and without it OSIsoft would have to move.

OSIsoft and city government officials formed a public private partnership and got creative. As the result of an earlier transportation project, the city had available conduit around the town that it offered to the initiative. Bay Area Rapid Transit (BART), which has two stations in town, had extra dark fiber that it made available. Kennedy hired a contractor to pull 288 strands of fiber through the conduit, 28 of which were given to the City for its use.

The end result of this effort was an 11-mile fiber ring around San Leandro that OSIsoft and other local businesses are using. San Leandro Dark Fiber LLC is the company Dr. Kennedy created to build out the infrastructure. Lit San Leandro is another company created to install the switch and routing facilities that light up the network for business subscribers. Cross Links System is a local ISP selected to provide Internet access and other services to businesses. The City currently is formulating plans for leveraging its share of the fiber to impact local economic development. Residential constituents currently are not served, but they likely will be considered during the economic development planning.

Find your hometown Google

What San Leandro has achieved is replicable in other communities. One good example is in upstate New York where Corning invested $10 million in a 235-mile fiber ring covering three counties. Corning’s business operations based in this area and its workers benefit directly from much needed broadband capacity, and indirectly by boosting the economic development of the communities around them. Since Corning produces fiber, this project delivers marketing value as a showcase for the power of the gigabit.

Joe Crookham is a successful business owner in Muscatine County, Iowa whose Musca Lighting financed fiber buildouts for his and several surrounding communities. These services are sold to businesses and residences. Informally, Crookham has waved the community broadband flag at the state legislature.

The key is to find a business or a group of businesses that are feeling the pain of not having sufficient broadband. According to Dr. Kennedy in a Gigabit Nation interview, “many urban areas are ‘copper towns,’ meaning the incumbents have built DSL or T1 lines that cover these communities’ residential users. But businesses and industrial parks need much more capacity than this as we see an explosion of data applications and cloud services. Incumbents generally see little value in serving these commercial operations.” Companies in technology, science and healthcare represent low-hanging fruit in alternative-funding partner searches.

However, along with the promise of these mini-Googles, there is a significant caveat for communities. Even though many local governments and local economies are struggling for money, they must resist the urge to close a deal at any cost. Stakeholders must maintain control of the business of broadband, that process by which communities use the technology as a tool to improve economic development, transform education and expedite healthcare delivery. Owning this process, whether or not they own the physical infrastructure or services, is how communities reap significant broadband benefits.

As the surging wave of gigabit initiative builds, we should expect to see a corresponding increase in creative public private partnerships. But the bottom line is that all negotiators of these deals should keep in mind that “private companies have to make money, and reinvesting in the public interest is always going to be a secondary concern,” states Forbes blogger McQuaid. Smart negotiating and planning, though, is how everyone wins.

Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.

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Zonoff was founded in 2011, when it spun out of a company called BuLogics. The core technology platform Zonoff offers has been in development for roughly 10 years, and it has 18 employees. Yet, in talking with Zonoff CEO Mike Harris, I found myself wondering where the connected home and the internet of things overlap and where they diverge.

Harris explained that the company wants to offer software to retail customers and big consumer brands that will help those companies offer a simple connected device experience for consumers. So, an automated climate control system might come with a Zonoff software supporting the app that controls a variety of devices that will make up the climate control system. He was less clear about building a true internet of things offering with the concept of a service built around open and easily shared data.

Harris, who helped found Anysource, a company that let people access web content on their TVs and was later sold to DivX, explained that consumers will likely go to a trusted brand for a connected home solution as opposed to buying a hub and doing it themselves. This runs counter to the go-to-market strategy that companies like SmartThings and Mobiplug seem to be pursuing.

Yet there are similarities. Mobiplug, for example, wants to let consumers add their existing devices to its app and control them from one place. It has a hub, but that’s not central to the consumer experience, that’s just needed to get everything connected. And SmartThings is also trying to build a platform where existing connected devices are represented online and can be controlled from an app or site. The difference is a consumer initiates and controls the experience.

So far Zonoff’s only named customer is a company called Somfy, which makes a home automation system called TaHoMa. That system uses Z-Wave and requires a customer to buy Somfy parts and controller programmed by a Somfy technicians. That’s a more expensive proposition.

I’m not sure if that will be indicative of all of Zonoff’s deployments, and certainly some consumers want someone else to take care of this for them, but it’s still seems closer to high-end home automation than the open services I’m hoping come with the internet of things.

This story was updated at 7:15 AM to correct the CEO’s name and the company’s employees. His name is Mike Harris, not Matt Harris. The company has 18 employees.

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Cheaper mobile phones with access to the web are certainly a part of that demand growth in developing nations, while in more traditional technology markets, hotspots, larger applications and cloud computing are to blame. Whatever the reason for demand, carriers are responding accordingly, with new submarine cables connecting more countries than ever before.

Telegeography tracks bandwidth supply, pricing and data on submarine cables, and the latest data shows how carriers that range from traditional players like Level 3 and Tata to newer investors such as Google are connecting all areas of the world. The firm estimates all regions are getting about 10 to 12 new terabits per second of capacity in the last five years. All in all in the last five years the world has gained 54 Tbps of new capacity.

This is great, because additional cables means more redundancy, so when accidents happen or cables get cut — as happened late last month off the coast of Egypt – traffic can route around the nicks in the system. That redundancy also allows new players into the market and can result in lower bandwidth costs, which is good for businesses buying bandwidth and indirectly for consumers.

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