Competition keeps incumbent prices down and speeds up

by Steve Blum • , ,

There’s a reason Chicago sings the blues.

If you want faster and cheaper broadband service, the surest way to get it is to threaten incumbents with competition. We saw it in Santa Cruz where, after years of charging high speed prices for low speed bandwidth, Comcast suddenly upgraded its network to support Silicon Valley-levels of service. The spur was a combination of legislative pressure, in the form of new eligibility for infrastructure construction subsidies, a county plan to create a fiber backbone connecting key economic areas and, critically, the announcement of a city-backed fiber to the home project.

The Consumerist blog has dug into AT&T’s service and pricing, and found a similar sensitivity to competition

In Atlanta and Nashville, GigaPower starts at $70/month for 1Gbps data speeds.

But in Chicago and Miami, where AT&T boasts of now offering “lower prices,” the monthly rate is $80, but for 300 Mbps data speeds.

That’s correct: $10/month more for slower access. If you want the full gigabit access available from AT&T in these markets, you’ll have to pay $110/month, more than a 50% price increase from the other areas.

The difference is Google Fiber, which is building out in Atlanta and Nashville, and offering a gigabit for $70 a month. On paper at least, AT&T is matching Google’s service level and price.

Here in California, the only place AT&T is offering gigabit service is in Cupertino (at least to some addresses) for, you guessed it, $110 per month. Don’t expect that to change any time soon: Apple’s home town isn’t even on Google Fiber’s list of possible destinations.