Cablevision responds to Verizon on 101 Mbps speed tier

Cablevision Rebuts Verizon Claims About 101-Mbps Service [Multichannel News]

Verizon advertises their FiOS fiber-to-the-home (FTTH) product with the tagline "This is Big. This is FiOS." But when Cablevision announced earlier this week that they were going to offer DOCSIS 3.0 cable broadband service that more than doubled the maximum speed of FiOS at a fraction of the cost that FiOS charges, Verizon began to take note.  I suppose, while they think about a new tagline for their product, executives at Verizon decided that they would play the obfuscation game on Cablevision's bold, new Optimum Online Ultra 101 Mbps product.

Verizon senior VP for media relations, Eric Rabe posted his take on the Verizon blog, calling the 101 Mbps service a "parlor trick," and speculating that the service would be limited to only a few lucky customers due to perceived network limitations. Rabe also questioned whether customers wanted broadband speeds as fast as 101 Mbps. On that point, I'll say that Rabe can speak for himself. Most people I know believe speed and price is important to them. 

Cablevision responded yesterday to Rabe's comments. Cablevision VP of media relations Jim Maiella said in a statement:

"Faster is faster, bottom line, and we've continued to attract customers and win J.D. Power and Associates' awards as the top broadband provider in our market, with two levels of very fast service and a broadband market share that exceeds 75%."

I think Verizon was caught off guard by Cablevision's announcement. Rather that simply matching the 50 Mbps speeds offered by the competing FiOS product, Cablevision boldly decided to make available a DOCSIS 3.0 tier with a downstream speed of 101 Mbps. 

I salute Cablevision for their move.  If there was any question about whether DOCSIS 3.0 could compete with FTTH, I think their new ultra-speed tier effectively answers it. The hybrid fiber-coax (HFC) networks deployed by cable operators have the capacity of providing huge speeds, despite what Verizon might say.

Actually, this move calls into question Verizon's whole FTTH strategy.  Deployment costs for FiOS are staggering, much higher than Cablevision's fully deployed HFC technology, so it's understandable that they're concerned that a cable operator is rolling out a superior broadband product at a fraction of their cost. 

Let's remember that both Verizon and Cablevision are in business to make a profit.  That means that capital costs inevitably are factored into long-term pricing decisions.  They have to be.  So it should come as no surprise that Cablevision's new service is twice as fast and one-third lower in price.  That's not to say that companies can't price products low in order to compete, and Verizon may decide they have to do that, but that is not a sustainable strategy nor will it motivate Verizon shareholders to continue to invest the billions still needed to extend FiOS reach throughout the rest of their service area.

Here at Insight, we're working behind the scenes, grooming our network, getting ready for DOCSIS 3.0.  No specific news yet, but we're watching these initial roll-outs and formulating our own plans.

And to the Verizon marketing team, how about this?  "This is FiOS. We're half as fast as cable and we cost more too."

Comments

[Steve Huff]

It appears that Cablevision understands the future much better then say TimeWarner who wants to try and put an end to people getting media online from sites like HULU by imposing CAPS. IP TV is the future of television, those that embrace that idea instead of trying to fight it and hold on to their "premium content" will fair much better then those that chose to go down with the ship.

[dave II]

HULU, Nice site.

Bandwidth eater

Insight’s system in Louisville to the best of my knowledge is 850 MHz which is about 133 channels. DOCIS 3.0 needs 3 channels to provide over 100 mpbs.

Sounds like a lot of bandwidth until I started thinking about it.

For example if 1000 insight customers in Louisville decide to watch an HDTV stream online at lets go with 4 mpbs per stream. That’s 4 gig which would need 4000/36 = 27 channels.

Before you write off this theory think about all the niche sports etc… that may only have the internet as a broadcast platform.

How does insight deal with this problem in an analog/digital system where customers are using unicast streams that eat network resources?