Cnet tackles the Gigabit Internet question

Cnet questioned the motives of cable operators this week when it comes to offering truly high-speed Internet.

Cable operators argue that the demand for those high speeds isn’t there. It’s not gigabit that consumers oppose nearly so much as paying more than $100 a month just for Internet. The problem is that by the time you pay for super high-speed Internet, cable, and a couple of cell phones, you can easily spend $300 a month, if not more, and that’s the price of a car.

We’re still coming out of a recession, and a lot of people are still trying to get their heads above water after the excesses of the previous decade. But if prices are within reach, people are willing to buy, after a half-decade of austerity.

Cable companies have a point about the cost of deployment, but they can do the same thing Google is doing: Deploy it to areas where it makes the most sense economically, price it decently, and see what happens. Like the article states, consumers don’t know what they want until it’s available. So the choice is to build the next big thing, or wait for someone else to do it and play catchup.

And we already know some of the answer of what they’ll do with it: streaming multiple 4k programs. Widespread adoption of 4K television may not be as fast as consumer electronics companies want, but it will happen eventually, and that super-high resolution video is going to need a lot of bandwidth, and we can’t forget the possibility of  other people in the house want to use the Internet at the same time.

The reality that cable companies have to deal with is that in the late 1980s, wealthy people paid $20 a month for phone service, $20-$30 a month for cable, and if they had a computer and a modem, $40 a month for Compuserve, which many people spelled Compu$serve because they thought $40 was so expensive. Adjusted for inflation, Compu$erve cost $80 a month. Why was $40 a month expensive in 1989, but the inflation-adjusted amount is midrange today?

I think part of the problem is that the decision makers’ salaries have risen much more quickly than their middle-class customers’ salaries have, and they’ve lost touch.

2 thoughts on “Cnet tackles the Gigabit Internet question

  • June 20, 2013 at 9:09 am
    Permalink

    Actually most, if not all, cable companies can’t do what Google’s doing… they operate under franchise agreements which prohibit cherry-picking and only putting service in certain neighborhoods. They’re forced to provide service to all parts of the city/county/etc.

    …brig

    • June 20, 2013 at 5:55 pm
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      You’re right, they can’t cherry-pick areas as far as offering service as a whole, but when there’s an upgrade cost involved, the more prosperous parts of the city get the faster service first. The suburbs full of half-million dollar homes got the faster service before the suburbs full of $60,000 homes did.

      And the cable company can pick between cities. If they offer gigabit in Houston, they don’t have to offer the same service in Detroit. So, upgrade the infrastructure in a city where it looks to pay off soonest. They’re doing it selectively anyway, but right now the selection criteria is to do it where Google is coming, rather than on planning for the future.

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