100 Mbps Talk is a Land Grab

There was a lot of chatter last week about Verizon planning to offer a 100 Mbps broadband service over their FiOS network. Telephony Online ran the story, but was quickly contacted by a Verizon spokesperson for clarification purposes. “Verizon expects to have its delivery processes for speeds like that locked down in 2009 so that service with speeds approaching 100 Mb/s would be enabled in the very near future,” the spokesperson said. “We have no product ready to announce for deployment in 2009.” So much for downloading that HD flick in five minutes – looks like you’ll have to wait until 2010 for that.

The 100 Mbps talk is somewhat ironic. On the one hand, it will take many years before any 100 Mbps service is anything but a blip on the broadband radar screen. Relatively speaking, it will only be available to a small fraction of broadband households, and a far fewer number of households will actually subscribe to it, given its very high cost. The vast majority of broadband subscribers will be on tiers of 20 Mbps or less for many years to come. On the other hand – it’s a land grab – pure and simple. It doesn’t matter that 100 Mbps service won’t reach the vast majority of broadband subscribers. It does matter that Verizon is perceived as offering the most robust broadband service available. Broadband is telecom’s future “local service” and Verizon knows their long term wireline strategy has everything to do with broadband and very little to do with “telephone.” By pushing the envelope with broadband speeds, they are making the FiOS and Verizon brands synonymous with the “biggest and best” broadband service available. The cable industry is pursuing a similar strategy with DOCSIS 3.0, or wideband. In some regards, Comcast is executing this strategy more effectively. In markets where their latest 50 Mbps wideband service is being launched, they are also doubling the speeds of existing broadband customers, at no additional charge. In so doing, all customers experience the arrival of wideband, whether they actually subscribe to the 50 Mbps tier or not. Both Verizon and Comcast want to establish a perception of broadband “king” and leverage that perception to grab as much market share as possible. Who cares if 100 Mbps has extremely limited availability and costs too much for most people anyway.