When one looks at the speed and cost of broadband service in the United States, the companies providing it offer many excuses for the high subscription costs. By comparison, Hong Kong residents have astoundingly fast connections today at a very low cost.
The contrast is significant: Hong Kong Broadband Network last year introduced a new option for its fiber-to-the-home (FTTH) service that offers speeds of 1Gb/s for less than $26 a month.
The United States has nothing close to that. But, as The New York Times pointed out, Americans could have it. Verizon, the nation’s leading provider of FTTH service, doesn’t offer a gig, or even half that speed. Instead, it markets a “fastest” service that is 50Mb/s for download and 20Mb/s for upload at a price of $144.99 a month. That’s one-twentieth the speed of Hong Kong Broadband’s download service for more than five times the price.
Hong Kong Broadband is a wholly owned subsidiary of City Telecom and was willing to suffer seven years of losses while building out its fiber network before it turned profitable. Despite its low prices, Hong Kong Broadband now operates in the black.
Inexpensive pricing of gigabit broadband is also practical in American cities, however.
“This is an eminently replicable model,” Benoit Felten, a co-founder of Diffraction Analysis, a consulting business based in Paris, told the Times, “but not by someone who already owns a network, unless they’re willing to scrap the network.”
In the United States, costs would come down if several companies shared the financial burden of putting fiber into the ground and then competed on the basis of services built on top of the shared assets. That would bring multiple competitors into the picture and push down prices. But it would also require regulatory changes that the FCC has yet to approve.
Dane Jasper, the chief executive of Sonic.net, an Internet provider based in Santa Rosa, CA, said that most broadband markets in the United States today are dominated by a single phone company and a single cable company.
“Why doesn’t Verizon offer gigabit service?” Jasper asked. “Because it doesn’t have to.”
When asked about its lack of gigabit service, C. Lincoln Hoewing, Verizon’s assistant vice president for Internet and technology issues, said, “We already offer 150 megabits,” referring to a tier of fiber-based service that is marketed for $195 a month to small businesses in many of its markets. It “seems to be satisfying demand,” he added.
In a follow-up e-mail, a Verizon spokeswoman addressed the company’s lack of gigabit service by saying that it offers “speeds that exceed what customers can and do use.”
Uncompressed, broadcast-quality HD video, for example, uses 23Mb/s. But it is possible to imagine situations — for example, a doctor’s office consultation involving specialists scattered around the country, poring over the patient and her cerebral angiogram simultaneously — where multiple, two-way video feeds could demand a lot of bandwidth.
All parties would need the ultrafast connections. But that level of capacity seems distant because each party needed to make it happen, including customers, software developers and Internet providers, is waiting for the others to show up first.
Google and Sonic.net are preparing an experimental deployment of gigabit service to 850 faculty and staff homes in a Stanford University subdivision. Separately, Google plans to select one or several cities where it will offer gigabit service at what it calls “a competitive price” to at least 50,000, and potentially 500,000, people.