All Internet consumers have grumbled from time to time about their Internet connection. The average Internet user pays less than $55 per month for at least 15 megabits per second of data — not the quickest rate available on the market but a decent-enough one to download videos, songs and photos.
But just how much would one pay for lightening speed Internet access?
For those who 'feel the need for speed' (a fitting reference here from "Top Guns") Comcast (CMCSA) will soon debut its Xfinity Platinum Internet service that boasts a 305 megabits per second download speed — arguably one of the fastest in the world. But consumers will have to pay up for the latest technology. Comcast charges $299.95 per month for Xfinity Platinum, nearly a six-fold premium to the national average.
Tuna Amobi, an analyst at S&P Capital IQ, says Comcast's ultra high-speed gamble was designed for a very small segment of the market but more importantly to establish the company's prowess in the increasingly competitive Internet space.
"What we're seeing in the broadband wars is increasingly played out on the speed front so you've got telecoms on the one side and cable industry on the other side," Amobi says in the accompanying video. "This has probably been positioned as a defensive weapon and potentially for bragging rights as well so cable guys can now say we can offer speeds that match or exceed the fiber based broadband. It's important for their marketing efforts."
Consumers get their Internet service from their telephone company, such as Verizon (VZ), or their cable company, like Comcast or Time Warner (TWX). The cost of a consumer's Internet plan depends on location and connection speed, and the price is usually bundled in a "triple-play" package that includes cable and voice services. Verizon launched its high-speed Internet plan last month for its FiOS customers. The plan offers 300 megabits for $205 a month with a two-year agreement — $100 and five megabits less per month than Comcast's service.
As of August 2011, 78 percent of U.S. adults and 95 percent of U.S. teenagers surfed the Internet according to the Pew Research Center. A new Federal Communications Commission report found that the average broadband Internet provider met 96 percent of advertised download speeds last year, up from 87 percent in 2010. Peak download times are between 7 p.m. to 11 p.m.
Amobi says consumers already pay more for the available 50 megabits deluxe Internet package and it will be a "quantum leap" for consumers to upgrade their existing plans.
"Most consumers feel very satisfied with the standard offerings out there," he says. "It's going to be very very tough to sell in this economic environment. Having said that there will always be a very small constituency of consumers that are always going to need the highest speeds out there but frankly at a point you can barely tell the difference."
Amobi predicts that Time Warner Cable will soon follow Comcast's lead in offering a super-charged Internet connection.
"Comcast has shown that the technology is in place to offer such speeds," he adds. "For Time Warner it's a question of when not if."
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