Broadband Communities

JAN-FEB 2015

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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60 | BROADBAND COMMUNITIES | | JANUARY/FEBRUARY 2015 INDUSTRY ANALYSIS Sell Services, Not Speed Internet access speed is an abstract notion for most consumers, according to a new survey. Service providers should show users how gigabit speeds can improve their experiences and even save them money. By Masha Zager / Broadband Communities I n the last few years, fber-to-the-home providers have used 1 Gbps speeds to get customers excited about their services. Chattanooga transformed itself into the "Gig City." Google asked, "What would you do with a gig?" Recently, Cincinnati Bell's chief fnancial ofcer commented that his company's 2014 gigabit launch was "a marketing play to change how the consumers view us as a company." Turns out, that may not be the most efective marketing strategy. True, the gig has generated excitement but mostly among the tech-savvy segment of the customer base. A recent survey by the marketing agency Pivot Group and its afliated publication, Telecompetitor, found that only 13 percent of U.S. Internet users had ever heard of a gigabit. About half the survey respondents couldn't say whether it was more or less than a megabit. (Several recent surveys by RVA LLC, commissioned by BroadBand Communities and by the Fiber to the Home Council Americas, consistently found that 23 to 25 percent of respondents recognized the term "gigabit," but as Michael Render of RVA points out, answers to questions of this nature depend critically on the phrasing of the questions. And in any case, even 25 percent is a low number.) Even telling consumers that a gigabit is very, very fast may not make much of an impression. Te Pivot Group/Telecompetitor survey found that fewer than one-third (32 percent) of Internet users knew how fast their current connections were. Nearly three-quarters (74 percent) said their current Internet speeds either met their needs or were faster than what they needed. "Service providers spend an awful lot of time and marketing spend emphasizing speed, but this research reveals consumers are confused regarding speed references and perceive that their current speed package is sufcient," says Dave Nieuwstraten, president of Pivot Group and co-author of the study. He adds, "Te introduction of gigabit services into a given market will require signifcant customer education and efective marketing techniques to help achieve adoption success." Without an understanding of the benefts of gigabit speeds, consumers are unlikely to pay a premium for them. Seventy percent of respondents said the $70 price point that Google introduced (and many other gigabit providers followed) was too high. Almost two- thirds (64 percent) said they would prefer to pay slightly less per month for their current speeds than pay slightly more for faster connections. Service providers introducing gigabit speed tiers include nontraditional players such as Google, large incumbents such as AT&T and small, community-based telcos, cooperatives and municipal utilities. According to the survey fndings, consumers may favor more traditional Internet service providers for gigabit services. An overwhelming majority said they would select gigabit service from a competing incumbent service provider over a municipal

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