Ahead Of 1-Gig Launch, ISP Slams Tiered Pricing
In the view of Sonic.net CEO Dane Jasper, providers that charge for Internet service based on speed tiers, set usage caps or that bill based on usage are employing policies that consumers might view as fair but are likewise artificially contrived by those providers.
He’ll be putting that ideology to the test in the months ahead as Sonic.net prepares to deploy a fiber network to about 8,000 homes in the San Francisco Bay Area city of Brentwood, Calif., to feed a 1 Gigabit-per-second broadband/voice mix selling for about $40 per month.
Installing tiered broadband services is “just configuration; that’s cost-less,” Jasper said, noting that his true costs are in elements such as the loop, the building out of fiber, the consumer premises equipment, providing customer care and sales and marketing.
He acknowledged that many consumers believe tiered pricing is a fair proposition because they are used to paying more if they get more. For example, they’re typically willing to shell out more for a porterhouse steak than for a petite filet.
“The difference is that in the steak [example], there’s more cow,” Jasper said. “It’s not artificial. There’s a higher materials cost. But when it comes to broadband performance and speed, the limits are artificial. They sound fair, but they’re entirely contrived. There isn’t a cost around speed. We believe that tiered pricing doesn’t make sense.”
The price for the coming 1-Gig service ($40 per month) is the same as Sonic.net charges for a broadband/ voice duo over its more widely deployed copperbased plant, which reaches about 5 million California homes in 110 cities, including Los Angeles, the San Francisco Bay Area and the Sacramento region.
A small portion of Sonic.net’s plant is all-fiber, serving Gigabit service to residents in Sebastopol, in the North Bay, and to a business park in Santa Rosa, in Sonoma County.
On the copper side, the big difference is speed. In that part of its footprint, Sonic.net matches a feature-filled voice product with a 20 Megabits-per-second broadband service based on ADSL2+ technology, also for $40 per month. “We just sell the pipe as fast as it will go,” Jasper said.
Sonic.net is also conducting some VDSL2 trials, offering commercial customers up to 200 Mbps downstream by 20 Mbps upstream by bonding together eight copper pairs, but the company expects its single-line residential VDSL2 offering to be somewhere in the neighborhood of 50/10, though the ISP needs more real-world data to determine what will be realistic.
In Brentwood, Sonic.net has committed to start connecting homes within nine months, and to complete the buildout to 8,000 locations within 15 months. To spur interest, it borrowed a tactic from Google Fiber, opening a pre-signup portal that will determine where the ISP builds out 1-Gbps first.
Sonic.net will also offer those residences an option to get a 5-Mbps Internet service for five years for free, in exchange for a one-time $300 connection fee.
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