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Sorry Fiber Fans, I've Got Some Bad News

More than 70 percent of U.S. broadband customers are happy with their overall service, ranking it between an 8-10 on a 10-point scale, according to Leichtman Research Group. A mere 3 percent scored their service with a 3 or less on the recently conducted survey, while just 26 percent said they’re “very interested” in receiving faster speeds at home. In other words, big, bold fiber efforts such as Verizon’s (s VZ) FiOS aren’t yet supported by consumer demand.

Leichtman Research Group surveyed 1,600 broadband-enabled U.S. households to get its data, which will undoubtedly be used to tout the current broadband status quo, especially after the Federal Communications Commission earlier this month released similar findings. And if 77 percent of people don’t know exactly what their broadband speeds are and 44 percent aren’t interested in them getting any faster, as Leichtman has concluded, then this data is another nail in the coffin for faster broadband speeds.

From an ISP’s perspective there’s no real need to invest in expensive fiber-to-the-home deployments or even cheaper DOCSIS 3.0 upgrades if the demand isn’t there. The lack of demand and quick subscriber take-up is one of the reasons Verizon has halted its deployment of FiOS fiber-to-the-home service and instead focus on achieving a 40 percent penetration rate among those homes that already have access to it.

Unfortunately, this satisfied consumer mindset will likely continue until demand for 3-D television, home telepresence or some other application that requires faster speeds becomes so ubiquitous and cool that people realize what they’re missing. No one will build such a service if only a small percent of the population with big broadband can watch it, a conundrum I discussed back in February, when I asked the tech community to build something so big, so wonderful, that it would help drive demand for faster broadband. Fundamentally fatter pipes are necessary to drive further technology innovation and reap the benefits of web-based services, so this apparent lack of demand at the last mile is a big problem.

In the meantime, the Leichtman data also offers even more good news for ISPs. Less than 1 percent of all households that are interested in getting broadband yet don’t have it cite cost as a reason for not subscribing. Taken together it means consumers are finding a lot of value in their current broadband pricing and packages. For ISPs it looks like broadband pricing and speeds aren’t broken, so there’s no need to fix them. Maybe Google’s (s goog) planned experimental fiber-to-the-home network can shake things up a little.

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14 Responses to “Sorry Fiber Fans, I've Got Some Bad News”

  1. Free Market


    Only you would view a satisfaction survey with positive results as bad news. This isn’t bad news for anyone but you and people who agree with your theories about how the government must step in and save us from evil ISPs that are holding our country back from reaching our potential.

    ISPs like AT&T and Verizon are making sound business decisions by slowing their investment in faster broadband if the demand for it is not yet there. This survey confirms this. If Google has too much cash and want to blow some of it on fiber networks with no hope to recoup the cost, more power to them. However, most businesses must justify to stockholders their investment decisions. Lack of consumer demand, combined with the lingering threat of Network Neutrality, means that justifying is not possible.

    There is nothing wrong with this if most people are happy anyways. Eventually, Verizon and AT&T and others will restart their fiber expansion. Why is it such a crime that they attempt to remain solvent in the process?

  2. Perhaps what we need are symmetrical connections. There are already applications completely impractical because of the very low upstream bandwidths of the majority of BB connnection. Remote backup (or remote storage) is perhaps the best example. We dont need home 3D telepresence to justify higher bandwidths (mainly upstream), remote backup would probably be more than enough.

  3. My company set up a large screen HD TV for the world cup soccer matches. We got to see the game in HD over our internet connection via ESPN3.COM. It was amazing! It was just as good as watching it via comcast or direct TV. If people knew what they can do with more bandwidth, I think the demand would go through the roof.

  4. I doubt these satisfaction rates would be so high if everyone on the same cable head-end or the same DSL switch were all watching HD movies from Netflix at the same time. I think the killer app already exists and it is HD content on demand to the TV. This means also that the medium for the last mile is increasingly irrelevant because fiber, cable and DSL can all reach acceptable speeds – it is the middle mile that is important.

    • Alex Soto

      Maybe so, but if you have more than one HD stream going (you and the kids or room-mates) and you’ll see most people’s connectivity choking on that.

  5. I’m sure 70% of people were satisfied with the performance of their horse and buggy before the automobile came on the scene, too.

    That’s why the Googlebit network will be great if they actually do it – it will serve as a lab for new bandwidth-intensive applications that will help the average understand what super-broadband can do for them.

    • McBeese

      @Aaron – I’m not so sure the Google experiment will be that remarkable unless Google does a really, really good job of picking locations to support.

      For example, I download a lot of HD video content from iTunes and it can take a while. If Google provides me with Gigabit speeds, it won’t change my experience at all unless the speed that the iTunes servers can transmit is also increased. It’s also possible that the network border gateways will remain a bottleneck in some cases.

      If you widen a freeway but you don’t change the rate at which cars can both enter and exit it, you haven’t increased traffic capacity.

      • This is true. I was thinking more along the lines of HD video conferencing, instantaneous file syncing between home and office computers, etc.

        From GoogleBit to GoogleBit should be amazing, but you’re right that there will be limits to what the lab can do…

  6. McBeese

    It’s all about asking people the right questions.

    If you asked me if I was satisfied with my broadband capacity, I’d say yes because it isn’t the lowest common denominator for my Internet experience. More bandwidth at my house is useless without more bandwidth at the servers I interact with.

    If you asked me if I wanted more bandwidth so I could access a disruptive new video over IP alternative to the existing bundled cable packages, I’d say absolutely!

    I don’t need more bandwidth to do what I’m already doing.

  7. From the private sector perspective, there is no reason to build something without customer demand.

    From a public policy perspective, we built the highways, without which we never would have developed the strong economy we did. My support of fiber (via community fiber networks, for instance) has less to do with what I think people want in their homes and much more with the future of the economy.