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Verizon Calls Cablevision's 101Mbps 'A Parlor Trick'
Doesn't think that cable plant can handle demand....
by Karl Bode 06:42PM Wednesday Apr 29 2009
On Monday we reported how Cablevision would soon be offering a 101Mbps+ connection at a $99 price point, a first for the industry. Given the product is the marketing equivalent of a drop kick aimed squarely at Verizon's face, it's not surprising to see Verizon criticizing the new offering. In a post over at the Verizon Policy blog, Verizon's PR and policy maestro Eric Rabe dubs Cablevision's new offering little more than a "parlor trick," and questions how Cablevision will handle demand. Says Rabe:
quote:
...given the inherent limits of the cable platform, a cluster of bandwidth junkies living near each other could be a real problem. One estimate is that a single 101 Mbps customer would use some 60% of the capacity in a neighborhood. Other users? Outta luck...so Cablevision is offering very high speed service to a very limited number of customers when there is little evidence of market demand for the speed. It is a parlor trick.
Verizon has been testing 100Mbps connectivity in employee homes for some time (see video), something made a little easier due to their $23 billion+ investment in GPON fiber to the home. However, even Verizon has admitted that the 100Mbps mark is more about marketing than demand until more bandwidth-intensive applications emerge. Verizon's vice president of FiOS TV content strategy Terry Denson had this to say back in 2007:
quote:
Are customers asking for 100 meg? No. Very few. But it raises the ante on the competitive landscape, so that customers believe that 100 Mb/s is what they need to have. . . A hundred meg ends up being a threshold because it's sexy. I don't think customer behavior is going to get there for several years. Some outliers will demand that and maybe more. But what really drives it isn't so much consumer demand. It's competitive marketing tactics.
Public demand or not, a $99 101Mbps connection is very sexy, and soundly beats Verizon's best offer. That's very attractive to a significant number of our sophisticated users, who ultimately drive the first wave of demand. They also are responsible for branding an ISP as either one that's hip to the needs of technophiles and heavy Internet users, or one that enjoys nickel and diming customers, shirking network upgrades for myopic investors, and whining about the unfair demands of consumers who want a clean, fast, cheap connection.

While we've certainly taken issue with a number of Verizon's legal and competitive moves, neither Cablevision or Verizon executives treat their high-end customers like second class citizens. In crossover markets, Verizon and Cablevision have forced each other, through the wonders of competition, to seriously re-invest earnings back into the network. The competition is also keeping metered billing at bay, an idea ISPs are hungry to start pushing in less competitive markets where 100Mbps is but a pipe dream (say Hi, Beaumont, Texas).

Whether Cablevision can handle multiple 101Mbps users without caps is a fair question, given nobody's actually tried yet. Time Warner Cable just got done telling consumers it's impossible to offer 15Mbps without low caps and overages. But keep in mind we watched Cablevision completely take the brakes off of DOCSIS 2.0 by offering consumers uncapped (in the true sense of the word) 30Mbps connections, and the company managed to survive the last three years without any sort of "coaxapocalypse."

That said, Cablevision has capped their users in the past, and what kind of (hopefully transparent and fair) network management approaches they use is something we will be watching carefully.

In the end though, it doesn't really matter what Verizon's hired policy gun thinks about Cablevision's move, because in truly competitive markets it's the consumer that calls the shots. Verizon also called Cablevision's decision to offer all of their customers free Wi-Fi a "marketing trick," yet consumers find the service useful. Ultimately, the ball is squarely in Verizon's court. If Verizon's argument is that their FTTH network is superior, then what's exactly stopping them from offering a better deal? This is, after all, how real competition works.


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Rick
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Parlor trick or not...

which I don't think it is...this is going to cause Verizon major headaches and what their PR people are trying to do is to blunt the impact of it as best as they can.

The BIG problem with Verizons fios rollout has always been
a) the cost of it to them
b) the time to roll it out and
c) the cable co's response to it..namely docsis 3.0

In one swift move..cablevision has taken the speed game totally away from fios. And they've done it quickly..and at a low cost as a company compared to what fios costs verizon if and when they can even get it to a customers home to begin with.

This takes a lot of the luster away from fios and potentially adds even MORE costs to fios trying to now keep up. Furthermore, what will some people think of fios when it finally gets to them...in 2014? It will be a sort of a has been compared to the very rapid deployment possible with docsis 3.0. Verizon is fighting a real uphill battle.
Trying to convince people to drop a cable company in favor of a telco for their tv service is bad enough. Trying to then compete in some cases years later when d3 is rolling out now just might be the end of the telco as we know it today. They need to convince a LOT of people to switch in order to make the cost of their fios rollout pay off. And that's in a climate where people are also dropping their landlines and dsl connections as well.
Verizon has some real problems with this I think, some which haven't yet become very apparent. And while Cablevision is relatively small as a company..what happens when a company like Comcast completes their D3 rollout?
If they're smart..they'll come down into this 99 dollar price point as well, and up the ante bigtime on the speeds as well.

It very well could be game over for Fios then if they do.

It should be interesting to watch how this all plays out.

~Rick
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Nightfall
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Are customers asking for 100 meg? No.

Are Broadbandreports users asking for 100 meg? No. They want gigabit.
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