- Sooner or later, every copyright holder is going to expect Google to play copyright cop. http://t.co/dmQ3PRp0qT ->
- Broadband Bytes for 2014-11-07 http://t.co/hBqmcpjVxw ->
- It might not take FCC action for muni broadband barriers to fall. http://t.co/xqdGOGnSRg ->
- Comcast's refusal to invest in network upgrades are costing it video customers too. http://t.co/ahJ22y9Lwn ->
- "No, really, we're super cereal about lawyering up." http://t.co/Hm39oxBaDz ->
- The White House unveils a net neutrality plan. Missing: any mention of competition. http://t.co/zBB6A67EVp ->
- More evidence that you should stop waiting for Google Fiber to save you from bad broadband. http://t.co/gXNHqwNnSL ->
- Here's a crazy idea: use eminent domain to shutter blighted incumbent networks. http://t.co/lfRUiMHSFK ->
- Confused about Title II and net neutrality? I wrote a little something about that. http://t.co/vCbgdVOUIz ->
- Could CableCARD be getting a lifeline? http://t.co/oDxixwBOd6 ->
- Everyone's favorite crazy rich futurist wants to build satellites for broadband. http://t.co/XW70tOvmF2 ->
- Layton says something (and yet nothing) about the negotiations with Macquarie. http://t.co/fQvy5M73Xt ->
- Comcast, you keep using those words "net neutrality". I do not think they mean what you think they mean. http://t.co/4HS3MdmYHA ->
- I'm a conservative libertarian Republican and I approve this message. http://t.co/nAQztrILbC ->
- Don't expect Title II rules anytime soon. http://t.co/IUEyHyUGKO ->
- Voters in Colorado vote to build their own broadband. http://t.co/4BTLMkuXQu ->
- The best Congress big telecom can buy. http://t.co/LVyWoUIqfn ->
- Sony wants a slice of the streaming video pie. http://t.co/ENEE6YtwRw ->
- Isn't it totally an adult response to pick up your ball and go home? AT&T thinks so. http://t.co/rtvMuAS65k ->
- Instead of chasing down more customers, why not just charge the ones who stay more money? http://t.co/AYrI7yvrPO ->
- The FCC and White House don't see eye-to-eye on Title II. http://t.co/A4wvEisU2C ->
- Love of the Jazz unites Utahns of all political stripes. Hatred of ISPs does it for Americans. http://t.co/fkzFscGkAy ->
- Want business service from Google Fiber? It's going to be in cherry-picked Kansas City areas only. http://t.co/iqBPIK5NBU ->
- http://t.co/1P5yiEB3bw CEO tells it like it is: net neutrality is a symptom, and no competition is the cause. http://t.co/NXNOKxre3E ->
- We have the PCs. Now we just need the fiber. http://t.co/OHpj6sxrjZ ->
- Want to know the wholesale rate for your TV service? Tough noogies. http://t.co/143PeOCbA0 ->
Broadband Bytes for 2014-11-14
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I often wonder if Net Neutrality is actually something we should be involving the government in. The reality is that eventually the market will dictate what can happen; we don’t need the government sticking it’s paws into the mix, and then somehow being able to legally wiretap all of us without cause.
As a side note: I think more people are recognizing that having competition against companies like comcast is a good thing. Speaking of competition, do the negotiations for the next milestone (effectively 2 and 3 as a single milestone) look like they are making any progress? I’m really crossing my fingers that they are moving toward the construction phase.
“I think more people are recognizing that having competition against companies like comcast is a good thing.”
I know I do. The problem is that Utopia only competes on the high end (>$60/m for 100M to 1G). Most consumers want something cheaper ($30 -$40, 20-30M).
Charles, I’ve already detailed why such a price point is simply not going to be possible. Cable, DSL, and fixed wireless providers can do it because their networks are paid for many times over or their infrastructure costs are much lower.
FYI, the AVERAGE price being paid for broadband in Utah is around $86/mo. That “Cadillac” broadband is actually coming in at Camry pricing.
Jesse,
1) Where did you get the $86/m for the AVERAGE? I think you previously told me it was ~$40/m?
2) If the average is $86/m how do you explain Utopia’s low take rates (30%) in passed areas? If people were willing to pay and average of $86/m for internet then Utopia take rates would be much greater than 50% since they offer the most for >=$70/m do they not?
3) If it is a fact that Utopia simply can’t offer any service for <$60/m then they will have to live with a low market share (if the average is $40/m.
4) What do Utopia's own market surveys say non-Utopia households are paying for internet? If they don't know this they are incompetent.
1) Ookla’s NetIndex: http://www.netindex.com/value/3,136/Utah/ And I was wrong. The average is closer to $58/mo. But that means that the 100Mbps package is right in line with the average broadband price (assuming your numbers are correct, which they aren’t), yet it is over 3x faster than the average broadband speed.
2) The network is poorly marketed and advertised in no small part because it is finished in non-contiguous patches. There’s also the problem of the install fee keeping take rates from being higher. Bear in mind, though, that Verizon was elated at an 18% take rate for FIOS within two years of a fully built footprint with heavy marketing.
3) Not true. If the install fee is removed, the network completed, and actual marketing done (all of which are components of the Macquarie deal), it’s feasibly to hit 40%+.
4) I don’t know the answer to that, but I also don’t have unlimited access to UTOPIA’s research data, do I?
1) Ookla’s NetIndex: http://www.netindex.com/value/3,136/Utah/ And I was wrong. The average is closer to $58/mo. But that means that the 100Mbps package is right in line with the average broadband price (assuming your numbers are correct, which they aren’t), yet it is over 3x faster than the average broadband speed.”
Isn’t this just data from those users that run their speed test?
“To best represent an area, Ookla requires a sufficient portion of the Internet population there to have used our applications in a relatively recent period of time. ”
It doesn’t count those who DON’T run the test frequently? Thus it is only measuring the “enthusiast” user? Almost by definition it doesn’t capture those more casual users, those who want lowest cost not highest speed?
“3) Not true. If the install fee is removed, the network completed, and actual marketing done (all of which are components of the Macquarie deal), it’s feasibly to hit 40%+.”
Well you can’t just wave your hands and get rid of the install fee.
One way or the other Utopia is incompetent if I believe you. If they have a competitive product for 100% of the market and their take rate is only 30% they are incompetent.
I expect they know they are only serving the high end and that the majority of customers are using a cheaper service.
Ookla does a very good job gathering data and normalizing it. They’re well-respected in the field. Show me another good source.
And yes, UTOPIA management has been bungling things pretty badly. They continually missed targets, they never followed up on using UIA money to deploy to residential customers, and they won’t even share useful internal data (like homes connected that aren’t taking service) with service providers. Whether or not Macquarie happens, there needs to be a wholesale management change. Anyone who would say otherwise is burying their head in the sand.
But your claim that UTOPIA can make money by chasing low-end customers with threadbare margins is not how they will turn things around. I’ve shown you the math that it is impossible; your turn to try and show the math that you’re right.
“Ookla does a very good job gathering data and normalizing it. They’re well-respected in the field. Show me another good source.”
They don’t claim to “normalize” it. They have no way to know what the missing data it. It is just what they say it is. Just data from those who run the app. It is a very bad source for making your point.
A better source is the fact that Utopia take rates are so low. This is explained by the fact that they have only a high end product.
“But your claim that UTOPIA can make money by chasing low-end customers with threadbare margins is not how they will turn things around.”
I never claimed they could make money. I only pointed out that they are selling a Lexus in a Toyota market and unless they find a way to address the mid to low range they will not increase their take rates.
On the other hand, If the recent Macquarie base rate proposal (5M/1M? for a $20 utility fee) made sense then I don’t see why slightly higher tiers would not make sense too. Something like 10M for $30, 20M for $40, ….etc). If it makes sense for Macquarie what is stopping Utopia from doing something similar now?
You offer no evidence that the lack of a low-end product affects take rates. In fact, the only thing you have done is made two true statements (take rates are low and there is no product in the $30-40/mo price range) and created correlation and causation out of thin air. You’ll have to do better than that.
And really, who gives a crap about take rates? It’s about the money, specifically if they are covering opex and the bonds. It wouldn’t matter if they had a 100% take rate if they couldn’t pay their bills. That’s why I brought up cannibalization, something you’re still not grasping. It makes no sense to offer a lower-end product if it makes you less money overall. Throwing out a 10M product would decimate sales of 100M and is highly unlikely to produce enough revenue to offset those losses. It does not, will not, and maybe will never (until the bonds are paid, anyway) make sense to do that.
Since you’re the one making the claim otherwise, it’s entirely and completely incumbent upon YOU to back it up. I think people who’ve been around here for a while know that I know my stuff, so if you’re going to throw down, you’d better start bringing better than this D-game stuff.
You are the one who made this claim.
“Ookla does a very good job gathering data and normalizing it. They’re well-respected in the field. Show me another good source.”
Which I proved your claim of normalization to be baseless according to Ookla. Which casts considerable doubt on your credibility on other issues.
I offered a credible explanation (Lexus in a Toyota market) for the low take rates. And all you do is wave your hands and postulate the Utopia marketing guys are incompetent.
You may be correct. But I doubt it.
I don’t understand why you are so defensive. We both want Utopia to succeed and offer strong competition to Comcast. As a marketing professional (BS physics, MBA, 25 yrs marketing VP in a multi billion $ high tech multinational), I’m just suggesting what seems to be the obvious problem based on my training and experience.
Working in the IT field, I can’t say for sure that most consumers want something cheaper as everyone I know would willing pay >=$70/mo for gigabit speeds. I myself pay $65/mo for comcast’s 50 megabit service, I’d go for the 25 to save money, but to my surprise it was the exact same price.
I haven’t seen what people actually pay for UTOPIA, but from what I understand the 100 megabit service is about $55/mo after fees and if you lease the line. That means, the 100mbit tier is ~$10 less than I spend a month with Comcast (and I’d get double the download, and over 10x the upload). If you go with Comcasts promotion prices for comparison, there is a difference, but it only equates to about $10/mo in Comcast’s favor. Everyone I know would drop Comcast in a heartbeat if they had an option besides Centurylink. The wireless options out there just aren’t realistic for today’s internet demands.
Century Link offers a bit cheaper prices (about $40/mo after fees), but after the 12 month promo ends, you are near, or above, the same price as Comcast. Looking up my home on Century Link’s site, the price is $45/mo+fees for a mere 7 megabit connection (the fastest I can get). Century Link ranges from $40-$70/mo.
I really don’t see the demand for a sub $40 price, because if there was, Comcast and Century Link would be offering it as a permanent price point (not a promotion to get customers using their service). From what I see, UTOPIA service providers are right in line with the competition on price point, and UTOPIA is delivering a “Lexus” quality service at a “Toyota” price point.
I just looked at the UTOPIA site, It looks like their fees have gone up to $30/mo. That makes UTOPIA $65/mo, which is the same as what I already pay. I’d gladly take that price point for fiber. Most everyone I know is paying this as well, and the age ranges of those people range from 25-90 (most of which are above the age of 50).
To add on to what Greg said (which is correct), let’s bear in mind that Comcast themselves say that their most popular tier is the $65 one and the second most popular one is the $75 one. I think that knocks the legs out of your argument that there is a demand for lower-priced tiers.
Source: http://www.washingtonpost.com/blogs/the-switch/wp/2013/10/01/these-charts-show-comcast-acting-more-and-more-like-a-monopolist/
One other addition to my comment. I don’t subscribe to pay TV, so my internet price is not a bundled price, it’s the stand-alone cost for internet service from Comcast. I’ve also done the whole, “cancel my service and renew it in my wife’s name” game to get the promo prices. Now that the promo prices come with a 2 year contract, I didn’t want to be locked into one on the chance that the Macquarie deal pans out and I can switch to UTOPIA next year.
I hear it’s been delayed until after New Year’s. This thing is really dragging out.
Greg,
I consider the idea of competition in the broadband space as being mostly smoke and mirrors, The cost of maintaining multiple over lapping networks increases exponentially with the number of networks available.
The number of points where wires overlap each other increases insurance premiums for line installers, creates additional need for utility poles as poles in most places are already well passed being overloaded. Creates additional legal overhead costs from home owners who don’t want additional companies tearing up their yards or installing utility poles into said yards.
As well the opportunity cost for obtaining customers increases rapidly with the number of overlapping networks.
Ultimately you will always be stuck with one or two dominate networks, as networks who have already paid the cost of building their network can complete on price in a way that new networks simply can’t.
The only way to break this loop is for an entity to build a network that is technology superior in a way that the incumbent networks can’t touch without building a whole new network themselves thus ending the paid network pricing advantage, And can be built by an entity that can spread the cost out over decades without being heavily tied to demanding shareholders, such as city governments using municipal bonds.
Ronald,
I completely agree about overlapping networks. This is why something like UTOPIA is perfect. Maybe this is the “open source” part of me speaking, but I’d rather pick a service provider based on customer service, and not on, “it’s my only choice”.
Imagine what Comcast would be like if they were forced to compete for my/our/your business. They won it, from me, by default because the other offering doesn’t care to update their communication lines that are even older than Comcast’s.
The concept behind UTOPIA would force those 1 or 2 dominant providers to actually provide great service, and as a consumer, I welcome that.
Ohh yes, but don’t think Utopia is the thing that most people are thinking of when they say “more competition”.
Far to many people delude themselves into think that their is some sort of magic formula for getting more private wire line providers into the market. It will never happen.
Greg,
I’m in the opposite boat, but looking at pretty much the exact same math: I currently have UTOPIA, and I can honestly say I have never been more satisfied with a communications provider. And I have had my share of communications providers: when AT&T first offered cable modem service in the Salt Lake area, we were living in Taylorsville. The day they installed the box for our neighborhood, I signed up. I’ve had McCaw, TCI, AT&T, Comcast, Dish, DirecTV, Verizon, Tmobile, Nextel (before they merged), Sprint (after the merge), AT&T, Cingular, back to AT&T, USWest (both cell and landline, when they had direct cell service), Quest, CenturyLink, Frontier, Wireless Beehive…. It’s not a small sample pool, even if most of those aren’t high on most people’s lists.
I am paying at the 100Mbit tier, $65/month, because I just can’t justify the extra $30 to get 10 times more speed… I simply don’t use all of my speed as it is.
However, I’m in Payson, which voted not to proceed with the Macquarie deal, so I’ve been pricing out my alternatives, and none of them are terribly attractive. To even come close to 100Mbit service with Comcast would be nearly double the cost (and that’s only 100Mbit down, not 100/100 as I get with Utopia. Which means my price doubles for about 1/2 the service= a 4x price increase). I can drop to 50Mbps down, for about the same price as I’m paying now, but even there, I’m still effectively paying 4x the rate, when you take into account the asymmetric nature of cable internet. And of course, that assumes that I actually get the advertised speed, which Comcast is careful to advertise as “up to.” When we lived in Orem, and I was between Utopia blocks, and thus unable to get Utopia, I was stuck with the comcast/centurylink duopoly. Comcast pretty much never exceed 50% of their advertised rate, except around 2-3am, and sometimes around noon. (yes, I’m one of Charles’ “enthusiast” users). Century link isn’t even in the ball park, and if the FCC has their way on the more realistic definition of broadband, I won’t even be able to get broadband from them. No wonder they are lobbying against changing the definition. The funny thing is, I hear people all the time referring to their advertised “up to 40mps” as a great deal, but at least in Payson, you can’t get even a tenth of that; but you still pay the same regardless.
Mike,
One other thing is that Comcast has low data caps. While I don’t reach them on a regular basis, netflix has ensured I get close. The caps for fiber are there just so they can say they have them, but I don’t see many people hitting 1 TB/mo (xmission, the only company I’ve really looked into) of data transfer consistently in the near future.
Just to add a (hopefully) sobering perspective here, I live near Logan and there are no alternatives to Comcast at my residence. I am on their 25Mbps plan for $80/month (though I’m on a new subscriber promotion for $35/month). The highest I’ve ever gotten on Ookla was 6Mbps. Routinely it’s around 1Mbps. I get the same speeds on Comcast’s own speedtest servers. After the promotion, I fear paying $80/month for 1-6Mbps.
I would gladly pay UTOPIA or anyone else up to $100/month for a reliable connection if they were available here. I understand the anecdotal nature of my situation, but also I think that most residential customers just want a cheap service that stays out of their hair.
At any rate, Comcast says that “there are no plans for at least 6 months out” to upgrade the network in my area. 🙁