One dark cloud: sky-high cost of 1-gig service

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Posted: Sunday, May 12, 2013 12:00 am

Demand for CenturyLink's 1-gigabit service in the first week was “good” and along the lines of what CenturyLink expected in the early stages, said Danny Pate, vice president and general manager for Nebraska.

In online forums, some have balked at the price, which for residential service is $79.95 a month when bundled with other CenturyLink services, or $149.95 as a stand-alone product.

Without being specific about numbers, Pate said there was an “immediate” response from the business community, including builders and developers, and especially those who build apartments, “so there is demand outside of the Choice TV area, and we are working those sales right now.”

Though CenturyLink has not shared information about how many 1-gig customers it will need to see before it expands the pilot project elsewhere, other cities' experience shows there may not be many takers — and the takers may involve businesses more than residents.

In Chattanooga, only 12 customers have purchased the full 1-gigabit service, said John Pless, spokesman for the electric utility EPB, which initially built its fiber system as a “smart grid” to help save on power costs and prevent outages. Of those customers, 11 are businesses, including a manufacturing logistics provider.

One factor working against 1-gig adoption there is the cost — $349 a month. Another is that EPB offers other very high-speed packages for less. About 3,000 customers have 250 megabits-per-second service. About 80 percent of customers have 50 mbps — still faster than the typical American household's Internet speed.

Google Fiber's 1-gig service in Kansas City also has not been widely embraced. In the few neighborhoods where it has been offered so far it has been sold to about a third of households, according to a survey by Bernstein Research, the Kansas City Star reported May 6.

Of households that bought Google Fiber, an estimated 85 percent to 90 percent bought a 1-gig package, sold for $70 a month alone or $120 a month with television service. The rest bought a service providing relatively slow 5 mbps broadband free for seven years with a $300 installation charge, according to Bernstein. Google has not made its actual sales figures available.

Allo Communications, based in Imperial, Neb., started marketing 1-gig Internet service in March but hasn't sold it to anyone who is not an employee or investor. Several businesses, however, are using Allo's fiber network to connect among multiple locations at 1-gig speeds.

Company President Brad Moline sees more businesses ramping up Internet service from, say, 50 mbps to 100 or 200.

“Hey, you might not need (1-gig) today,” he said, “but look how fast things are moving.”

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