The growing popularity of connected TVs and efforts to build interactive programs will drive the next wave of broadband demand. That future and the continued growth of devices in the home are all reasons that Verizon has launched a 300 Mbps broadband tier and will continue pushing the speeds on its fiber-to-the-home network.
Last month Verizon(s vz) said it would offer speeds of 300 Mbps to consumers in its fiber to the home footprint and earlier this week it revealed that those who are interested better be prepared to shell out $210 per month. That’s pricey but it’s not like superfast broadband tiers don’t cost a lost when they first hit the market. Recall that Comcast’s (s cmcsa) 50 Mbps service cost $150 per month when it arrived back in 2008. It’s now $100.
Verizon has changed up its pricing and speed tier names with this refresh, but beyond the pricing the most interesting bits from this announcement came from the conversation I had with Heather McDavitt, director of consumer product management at Verizon, on the current consumer demand for broadband. McDavitt explained why the 300 Mbps tier doesn’t come as a part of a bundle. The answer is both that those customers probably are more interested in streaming, but also that Verizon isn’t sure what customers will want at that speed and price range.
She says that about 55 percent of Verizon FiOS customers
now would take the 50 or 75 Mbps speed option with a mere 15 percent taking the 150 Mbps tier. That means that 70 percent of the FiOS customer base is buyingwill buy a broadband service that was considered top of the line a mere five years ago (prior to the new speed tiers, 63 percent of Verizon customers purchased speeds above 25 Mbps.). Sure, fiber to the home is the premium broadband service one can get, so it stands to reason that customers who choose it may be earlier adopters or intentionally heavy broadband users. But it also shows how far we have come in terms of our home broadband demand.
There are several reasons for this, but it boils down to the presence of more devices in the home and streaming video. Other dynamics such as whether or not folks are gamers or work from home also comes into play, but across the board it’s the rise in Netflix(s nflx) subscriptions, YouTube(s goog) videos and family members toting smart phones, tablets, perhaps while watching content on a connected TV. If there are four people consuming media with a tablet in one hand and their eye on the TV, your home requires a fat connection.
As for when Verizon might raise the threshold again, McDavitt isn’t sure. “Netflix and streaming is really pushing the need right now and with tablets and touch screens and how [customers] are interacting with them and putting demand on their networks” just taking off, you can see why Verizon introduced the 300 Mbps package.
But because Verizon has installed a fiber to the home network, it has the headroom to boost speeds on its network — after all it’s testing 10 gigabit connections in its labs.