American consumers have some of the slowest broadband connections in the developed world, according to CIO.com blogger Bill Snyder. Verizon will no longer build out its fiber to the home (FTTH) broadband network in new areas, and Google is one of the only U.S. companies still investing heavily in fiber.
American broadband users are stuck in the slow lane. On average, we’re poking along with download speeds of about 22 Mbps, service that’s much slower and more expensive than the fiber to the home (FTHH) networks enjoyed by consumers and businesses in parts of Europe and Asia. Sadly that’s not going to change anytime soon.
Running fiber over what the industry call “the last mile” to the home costs the carrier at least $2500 per subscriber, according to the FCC, and that’s simply too big an expense for most of them. (Google is an exception, and I’ll get to that.) The most recent company to retreat from FTTH is Verizon, which had been pushing a service it called FiOS.
Verizon CFO Fran Shammo recently told folks at a Deutsche Bank conference on telecom services that “I am not going to build beyond the current LSAs (local service acquistions) that we have built out.” Translation: If your community doesn’t already have Verizon FiOS you won’t get it. If Verizon currently delivers FiOS to parts of your city, you might or might not be able to sign up.
At some point in the future when Verizon figures it can make money on FiOS it will likely return to the market, but Shammo did not indicate when that might be.
I should note that the 22 Mbps stat is an average, which means that many people, particularly those on DSL, have much slower connections, and those that have faster connections are probably paying a stiff premium for the privilege.
With Verizon out of the game for now, and AT&T largely offering a hybrid service called U-Verse, which in most areas (Austin will be an exception later this year) is slower than fiber, most consumers will remain stuck with relatively slow connections. Some cities have gotten so impatient that they are building their own fiber networks – a strategy the big carriers and their allies are trying to outlaw.
There is one ray of hope. Oddly enough it’s Google. The search giant stuck its toe into the FTTH market a couple of years ago with pilot projects in Kansas City and a few other places, but announced in February that it wants to wire another 34 cities in nine metro areas around the country. In theory, it would give subscribers download speeds of up to a Gbps, which is really, really fast.
It’s hardly a done deal. Google is essentially asking local governments to sit down and negotiate an agreement. How many deals will actually get done is anybody’s guess. But at least Google is trying. And that’s more than I can say for Verizon.
San Francisco journalist Bill Snyder writes frequently about business and technology. His work appears regularly in CIO.com and the publications of Stanford's Graduate School of Business and the Haas School of Business at the University of California at Berkeley. He welcomes your comments and suggestions.