Cable, Telcos Raise Broadband Speeds to Meet Coming Demand

The highest download speed, 50 Mbps, is offered to some Comcast, Verizon and SureWest customers, executives said. On AT&T U-verse service, the top speed is 10 Mbps, and Charter tops out at 16 Mbps, company officials said. In many areas standard cable-broadband offerings are 5 to 6 Mbps downstream and 500 kbps to 2 Mbps for uploads, said an NCTA spokesman. Cable speeds have risen in recent years, but prices have stayed about the same, he said. Some telcos are testing 100 Mbps service. In the first half of 2008, cable, landline and wireless-phone providers and others spent more than $30 billion on networks, he said.

Customers demand higher speeds and seem to use them, so ISPs likely will continue to ramp up speeds, executives said. In some areas Web speeds have doubled every 20 months, said Amontree. “Speeds are just going to keep climbing.” There’s been “a big shift in how typical consumers think of the Internet, from being a place where you go to seek out information to a place where you go to store and share your own information,” and faster broadband speeds have contributed, he said. ISPs that dramatically raise download speeds may need to increase upstream speeds as more customers use cloud computing to store photos and video, ABI Research analyst Mike Wolf said. “Over time, upload speeds become just as important, as more consumers use cloud-based storage to back up their content and share their content with others.”

Telco and cable executives and analysts agree that a rise in video streaming is among key factors increasing Internet traffic. Bandwidth-heavy broadband uses also include peer-to-peer applications, telecommuting, social networking and online gaming, they said. “Customers are using their broadband connection to download music and videos, play bandwidth-intensive games, share photos and perform a variety of other actions without waiting even a couple of seconds,” said Jitesh Bhayani, Charter director of operations marketing. “Consumers’ desire for increased speed will only expand as more sophisticated applications become available.”

Build it and they will come seems to be the premise, as some ISPs raise download and upload speeds in anticipation of more-sophisticated, bandwidth-sapping applications. Verizon believes “that if we can offer these services then application developers will create more uses for them,” a spokesman said. “Existing services such as photo-sharing sites will begin to optimize their services to leverage these speeds.” It could cost $100 billion the next five years for U.S. ISPs to build out networks to handle an expected 50-fold increase in traffic from 2006 to 2015, CEO Marty Lafferty of the Distributed Computing Industry Association, representing P2P and other companies, said.

“All of our media distribution is going to move to the Internet,” Lafferty said. Speed increases are “demand driven and it’s all about this migration,” he said. ISPs should make 100 Mbps downstream service widely available and boost upload capacity so it’s closer to that for download, he said. “You want to be able to support high definition [video] without creating congestion, without having serious issues with buffering. You want the quality to be there so it’s push and play.” Senior Vice President Harold Feld of the Media Access Project called faster symmetrical speeds a must. “If we want to encourage the development of new services, if we want to put a new resource out there that’s going to be taken up for all kinds of interesting opportunities, then we should be acting to boost bandwidth.”

ISP executives see demand for their highest speeds rising, they said. “Customers are willing to pay extra to get additional speeds,” said Haavard Sterri, SureWest’s executive director of product marketing. “When they realize they like that speed, they are willing to stay with it at that price” after introductory offers expire, he added. “The speed is very important for the gamers.” That telco’s most popular broadband package, 10 Mbps symmetrical, costs $51.99 monthly for buyers of at least one other SureWest product, said senior product manager Becky Horan. The symmetrical 50 Mbps product costs $191.99 bought that way.

Verizon is selling more of its 20 Mbps FiOS symmetrical packages, the spokesman said. The price is $64.99 monthly for those with service commitments of at least a year, and 50 Mbps downstream and 20 Mbps upstream is $89.95 to $139.95, he said. “As the Internet becomes increasingly interactive and users create and send as much content as they receive, faster upload speeds are becoming a necessity for many.” AT&T’s monthly broadband prices range from $14.95 for 768 kbps DSL service to $55 for a 10 Mbps U-verse product bought with other company services, a spokesman said. Subscribers don’t have to sign a contract to get those rates, good for two years, he said.

Some analysts believe demand for ISPs’ fastest tiers is limited for now. They see speed increases as preparation for future use of heavy bandwidth applications. “Online video is still a nascent activity,” Heavy Reading’s Adi Kishore said. “It’s going to grow considerably, and increased capacity will be that much more important in the future.” Pike & Fischer analyst Scott Sleek sees speed increases as “a lot of future- proofing,” he said. “Some of the P2P crowd and hardcore gamers are probably very attracted to this. Beyond that, I think it’s a huge question. There may be a little bit of putting the cart before the horse.”