Chattanooga fiber success punctures Gigabit hype

by Steve Blum • , , ,
In Chattanooga, Tennessee, electric power is provided by EPB, a municipal utility company that is also in the fiber optic business. EPB claims that anyone in its 600 square mile footprint can get a 1 Gigabit connection to a home or business. The cost is $350 per month.

Word is that thirty four subscribers, out of about 150,000 passed, have opted for 1 Gig. There’s been a lot of handwringing about this supposedly low take rate, with a lot of criticism directed at the price.

Bunk.

It’s a bargain, and thirty four subs is a great result. Better than you’d expect in Silicon Valley.

You can get unshared, bi-directional 1 gig for, say, $500 per month if you plug directly into a Tier 1 provider in Silicon Valley. Getting to that Tier 1 router costs a lot more than that – hundreds or thousands per month. Technically it’s better quality of service than the burstable 1 Gig you’d expect from an ISP, but for home users and nearly all businesses there’s no practical difference.

There are relatively few businesses that can truly use, let alone need, a fulltime Gig of Internet bandwidth right now. And no consumers. Having a service that’s burstable to 1 Gig can be fun, and at $350 per month a screaming bargain, but it’s like owning a Lamborghini: you’re not doing it because you want to get to the supermarket faster.

Even HD video service via a last mile fiber connection to a local server doesn’t need a Gig. It doesn’t even need 100 Megs. Business and consumer interest in high speed connections drops off dramatically once you get much past 10 Megs, if there’s a marginal cost involved. Chattanooga is certainly showing the case for fiber service at a lower speed: 37,000 customers have signed on for consumer-grade packages.

In Silicon Valley, there are fewer than 100 commercial customers, total, on the municipal dark fiber networks. Granted, some of those customers are themselves resellers who serve many businesses, but that’s the point: businesses buy only as much as they need. Other than telecoms, data center or Googlesque companies, few, if any, need Gigabit class service.

It’s hard to see this demand case changing much in the next five to ten years, but regardless, so long as the glass is there and the electronics are configurable and/or upgradeable to 1 Gig, you have everything you need.

If the Chattanooga folks have 34 users willing to pay $350 per month for a theoretical Gig, they are doing very, very well. For themselves and for their customers.