100Mbps broadband may be closer than you think

If you're looking forward to a future of streaming movies, gargantuan Internet file exchanges, and other high-bandwidth activities, cheer up.

Broadband service providers in most of the major markets around the country will soon be able to deliver 100Mbps broadband service with no problem. That's enough to download a music album in as little as 5 seconds, an hour-long TV show in about 30 seconds, and a high-definition movie in roughly 7 minutes, 25 seconds. But it's going to cost you.

This should make the Federal Communications Commission's goal of getting 100Mbps service to 100 million homes by 2020 an easily achievable goal. Several weeks ago, FCC Chairman Julius Genachowski said he is making the 100Mbps-to-100-million-homes goal a part of the National Broadband Plan that will be presented to Congress next month.

From a technical standpoint, 100Mbps is achievable today. In fact, Cablevision is already offering a 100 Mbps service, and Comcast, which has been offering 100Mbps to business customers since September in one test market, is about to launch 100Mbps service to consumers in several markets in the first half of this year.

Verizon Communications, which has deployed fiber directly to people's homes, doesn't offer 100Mbps service right now, but a company spokesman said such a service will be available soon. And Cox Communications, which is also upgrading its cable network, said it will have 100 Mbps service this year as well in some markets.

The issue is not whether those speeds can be achieved nor is it whether broadband providers can reach 100 million homes with the service in 10 years. Docsis 3.0, which is the next generation of cable networking technology that allows operators to bond digital channels together, can easily provide 100Mbps or more. Most major cable companies in the U.S. are well on their way to upgrading to this technology. Meanwhile, Verizon has already passed 12.2 million homes with its fiber service, which it claims can offer up to 400Mbps download speeds.

Will you pay for it?
The real issue is whether anyone needs those kinds of speeds, and how much they are willing to pay for it.

"The technology is being deployed today to get to 100Mbps," said Mike Jude, program manager for Consumer Communication Services at Frost & Sullivan. "So there is a high probability that when the need occurs, it will be available to most subscribers. But like any other technology, such as Betamax through Blu-ray, early adopters will pay the price."

Indeed, 100Mbps service won't come cheap. Cablevision is charging $100 a month for its service, which some might say is a bargain considering Verizon is charging as much as $145 a month for a 50Mbps service. Other 50Mbps download services from cable operators are similarly expensive. Comcast, Cox Communications, and Time Warner Cable all offer 50Mbps service for about $100 a month.

Comcast won't say how much its 100Mbps residential service will cost yet. The company has been offering the 100Mbps service as part of a pilot program to business customers in St. Paul, Minn., and Minneapolis since September for $369.95 a month. This service includes a suite of Microsoft services as well as Norton Antivirus software for 25 computers.

It's very likely the price of the consumer service will be much less than this, said Cathy Avgiris, senior vice president and general manager of communications and data services for Comcast. She wouldn't elaborate on how much less, but judging from the price of its 50Mbps service, consumers shouldn't expect to pay less than $100 a month, which highlights a crucial question. What kind of consumers would subscribe to a 100 Mbps service?

"I think you can always ask that question when you're looking at cutting edge speeds," Avgiris said. "In 1999, I remember wrestling with the idea of who would jump from a 1.5 Mbps service to 3Mbps service. We've learned as we enable faster experiences online, consumers find applications to use the bandwidth."

Avgiris added that high-definition video will likely be one killer application that drives demand for more bandwidth.

But 100 Mbps is a lot of bandwidth. Even though every major ISP on the market except AT&T today offers 50Mbps service in at least a portion of their footprint, the majority of consumers still opt for much slower services. In fact, the average consumer subscribes to a service that is between 3Mbps and 6Mbps. In areas where super fast broadband is available, Frost & Sullivan's Jude said the most popular services offer download speeds of about 10Mbps and cost between $40 and $50 a month.

Seth Hogan, vice president of strategy and product management for Cox Communications, which is offering 50Mbps service in areas where it has upgraded its network to Docsis 3.0, said consumers most interested in the top tiers of service are typically early adopters. These are generally tech-savvy individuals. Many of these people likely work from home and require higher speed services to share bandwidth-intensive files. Some of these consumers may be gamers. All of them do enough heavy file sharing, play multiperson, real-time games, or watch high-definition video, that they notice the difference in performance when jumping from a 12 Mbps service to a 50 Mbps service.

"Customers, no matter how technical they are, tend to value the ability to go faster," he said. "There are few applications that don't benefit from an increase in speed."

The multiplier effect
But he also noted that consumers that truly need upper-tier services generally live in households where multiple devices are connecting to the Internet at the same time.

"Gone are the days when someone connected a single PC to a cable modem," he said. "Our higher-tier customers are usually networked within the home with Wi-Fi and they're connecting a desktop, two or three laptops, a gaming console, Internet photo frame and countless other devices to their home network. And it has a multiplier effect."

This so-called multiplier effect will likely be the main reason most consumers will need to bump up the speed of their broadband service. Individually, today's average broadband speeds can handle most applications. But when these applications run simultaneously, it's easy to see how faster services will be needed. For example, Verizon estimates a regular standard-definition home monitoring system with four cameras could use between 2Mbps and 4Mbps of upstream bandwidth. And a high-definition version of that same home monitoring system would require between 6Mbps and 10Mbps of bandwidth to upload. Meanwhile, streaming a high-definition movie could consume between 7Mbps and 8Mbps of bandwidth, depending n the encoding that is used.

Frost & Sullivan's Jude said the killer application for 100Mbps service may not have even been invented yet.

"There could be applications out there that we haven't even dreamed of yet," he said.

That's exactly why Google is planning to build an ultra-high-speed network to test new applications and infrastructure. Last month, the company announced it planned to launch 1 Gigabit per second networks that serve 50,000 to 500,000 individuals across the country. The fiber-based broadband networks will help stimulate innovation for next-generation Web applications, new infrastructure deployment techniques and it would help shape the conversation around broadband policy, the search giant has said. Cities around the country are already looking to partner with Google on these fiber-optic test beds.

Networks such as Google's could help developers come up with new applications that would need 100Mbps connections. And as demand grows for these high-speed services, operators will lower the price of service. Traditionally, when operators upgrade their network speeds, they increase speeds while keeping their basic tiers of service priced the same.

What's interesting to note is that for the past several years, $40 to $50 a month has been the sweet spot for broadband services. No matter how fast the service, over the years most consumers have opted for packages at this price point. As their networks get upgraded, ISPs increase the speed of their services, maintaining the $40 to $50 price point for their mid-level or basic offerings, which typically turn out to be the most popular.

"One thing is certain, every time there has been a net improvement in network capability, applications have quickly evolved to consume it," Jude said. "So when there is sufficient demand for 100Mbps service, prices will adjust to make them more affordable."

This means that today's popular midtier 10Mbps service that costs $40 a month could be 2020's 100Mbps service for $40 a month.