Rural America has a surprising mix of broadband options from fiber to the home in a few places to satellite broadband in the most remote. But the most common speeds aren’t much to write home about. Median downstream speeds were between 1.5 Mbps to 3 Mbps in the first quarter of 2012, according to a report published by Calix. And upstream rates remained slow as well, with 95 percent receiving 1.5 Mbps or less. Other than details on speed, the gear maker also proposed a future for wireline pricing that’s less punitive than caps.
The Calix report, which covers the first quarter of the year and contains responses from 50 ISPs and 100,000 end points, also said that 71 percent of rural subscribers received a downstream broadband speed that was slower than the target for the Connect America Fund and National Broadband Plan goals of 4 Mbps. Roughly 90 percent fell below the CAF upstream target of 1 Mbps.
But rural customers surf the web just like the rest of us with 94.3 percent of social networking traffic going to Facebook (s fb) and 85.2 percent of the e-commerce traffic hitting Amazon.com(s amzn). Amazon was followed by eBay (7.3 percent) and Craiglist (6.9 percent).
And like the rest of the country video streaming is a big contributor to overall network traffic — accounting for 64 percent of downstream internet traffic. Most of that traffic (83 percent) came from large content delivery networks, but perhaps that will change now that Netflix (s nflx) is deploying its own servers into telco endpoints. Google (s goog) was another big winner when it came to traffic. The search engine delivered 76 percent of all downstream and nearly 48 percent of all upstream browsing related internet traffic.
Outside of the application-specific data, the most relevant elements of the report are those that deal with the looming reality of high-bandwidth users — not as resource hogs, but as potential customers for high-end services. The report notes that faster speeds mean greater usage with providers that delivered broadband services exclusively over fiber seeing subscribers generate 2.3 times more downstream traffic and over 2.4 times more upstream traffic than subscribers with copper lines.
It also broke down how the heaviest users affect the networks they were on as indicated in the chart to the right. Clearly with the top users consuming more than half of the network resources there is a disparity. But Calix suggests that punitive efforts like caps aren’t the way to go. From the report:
…it’s easy to determine the network inflection point at which a small subset of endpoints consume a disproportionate amount of capacity. The subscribers associated with those endpoints can be identified and proactively approached as opportunities rather than problems. They can be offered new service packages that better correlate with their use. The majority of these endpoints, for example, are heavy users of video streaming. A package that offers a superior video streaming experience may offer the service provider the opportunity for an up-sell, and the subscriber with a better experience – a potential win-win for both parties
So maybe Time Warner Cable with its new discounts is onto something as it tracks customer usage and considers how to price broadband. Caps may not be the tool to extract the most profits from broadband-loving users, but clearly faster service and perhaps better quality helps. Of course ISPs will walk a fine line with network neutrality rules as they seek to create a model for pricing access to their networks to meet the demands of video streaming.