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Cable companies are making too much money to bother with 1Gbps service

December 2nd, 2013 at 1:30 PM
Cable Companies 1Gbps Internet Service

Whenever you see an industry with high profits and low customer satisfaction ratings, it’s a good bet that it doesn’t face the same kinds of competitive pressures that most industries deal with on a regular basis. Such has certainly been the case with the cable industry, whose largest two vendors don’t even compete with one another in any major markets. And as Ars Technica reports, cable companies could dramatically boost their services’ speeds starting today if they wanted to… but they won’t because they aren’t facing any competitive pressure to do so in most markets.

“DOCSIS 3.0 is the dominant specification powering new cable modems today,” Ars explains. “Matthew Schmitt, director of DOCSIS specifications at CableLabs (the consortium that manages DOCSIS), said 3.0 can comfortably hit about a gigabit. DOCSIS 3.0 gains bandwidth by bonding together 6MHz channels, each of which can carry about 38Mbps. A 24-channel modem could deliver 912Mbps downstream, and 32 channels could boost that to 1.2Gbps.”

So why aren’t we seeing a more aggressive rollout of better services and maybe, if very very we’re lucky, price cuts to current service tiers? Gig.U’s Blair Levin tells Ars that cable companies can’t justify making more aggressive investments in their networks when their current services are so profitable and when they don’t face any pressure from competitors to improve their game. In other words, if they move too fast to improve their offerings, they’ll risk angering Wall Street.

“Since the early days of cable Internet service, the model has been scarcity based, designed to sell different packages to different consumers at different price points,” Levin explains. “Google Fiber is the first package that is designed to sell abundance.”

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