Sorry CenturyLink, businesses do need a Lamborghini

by Steve Blum • , , , , , ,

Don’t ignore the business model.

“It’s like having a fancy sports car. It might go 200 miles per hour, but what good does that do if the speed limit is 60?” said Jim Schmit, CenturyLink’s vice president and general manager for Idaho, as quoted in the Idaho Statesmen. He was trying to explain that he’s not worried about the threat posed by Google Fiber or other gigabit competition, because homes and businesses don’t need that kind of speed.

He’s right in a limited sense, but he’s missing the trees for the forest. For the average residential customer, there’s little practical benefit to a gigabit, as opposed to, say 50 or 100 Mbps. As I have argued in the past, a gigabit, like a Lamborghini, is fun – if you can afford it – but it’s not going to get you to the supermarket any faster. For consumers, for now, it’s conspicuous consumption and not a way of meeting daily needs.

But extend the analogy to business users, and it proves the opposite: there’s a growing customer base that can make a profit from a gigabit. Most of the customers on the City of Palo Alto’s dark fiber network are big tech and telecoms companies, but there’s also a handful of law firms that are willing to pay a couple thousand bucks a month for a ripping fast connection. Part of that is image – a vital business tool for lawyers – and part is profit. It doesn’t take too many last-minute electronic filings at legal eagle hourly rates to cover the cost.

But for most industrial-class users, the proper analogy isn’t a sports car, but a tractor-trailer. A vehicle that’s completely impractical for consumers (not that it stops some people) is absolutely indispensable to business. Whether it’s big rig or gigabit traffic, if a city can’t handle it, it’ll be stuck with a pickup truck-class economy.