Internet and cable service competition is ramping up locally as providers Mediacom and AT&T reveal their investment plans in a fight to grab market share.
Investments aboundThe latest plan by AT&T Inc. (NYSE: T), dubbed Project Velocity Internet Protocol, is a three-year, $14 billion national investment initiative to expand and enhance its wireless and wired IP broadband networks. Launched in February, Project VIP follows AT&T’s $110 million investment in the Springfield area during the last three years to improve its wireless and wire-line networks for phone, Internet and cable customers, according to John Sondag, president of AT&T Missouri.
As part of Project VIP, AT&T plans to expand 4G long-term evolution services to cover more than 300 million people nationwide by 2015 and expand its fiber network to reach 1 million additional business locations by 2016. While Sondag didn’t know Missouri’s portion of the plan, he said since 2009, AT&T invested $1.8 billion across the state, with improvements in southwest Missouri representing about 6 percent of the sum.
Mediacom Communications Corp., which established its core fiber optic network in the area nearly 10 years ago, spent $10 million locally on upgrades in 2012, and the New York-based company is planning another $3 million in the market this year, according to Steve Bennett, Mediacom director of area operations in southwest Missouri.
The investments were planned ahead of a Federal Communications Commission report in February that ranked Mediacom among the top five Internet service providers in the U.S. for delivering advertised broadband speeds. At No. 5, Mediacom’s sustained actual download speed was 99 percent of its advertised speed during the September testing period. AT&T was recorded at 87 percent. The average ISP delivered 96 percent of advertised download speed during peak usage periods, according to the FCC report.
The investments are helping the company push back against market share losses during the last two years as AT&T has entered the fight for local cable dollars through its U-Verse service.
Bennett said Mediacom the last two years has added to its 20 megabit-per-second service options for 50- and 105-Mbps to allow more data capabilities to its customers. “The beauty of fiber is that you can change or transmit and receive equipment and continue to gain speed and capacity on it,” he said.
Market demandsSondag said AT&T’s U-Verse service is still limited in Springfield, covering the city like Swiss cheese, which emphasizes the Dallas-based company’s approach to focus largely on wireless broadband capabilities.
“But taking that technology and trying to put it in less densely populated areas, the economics just don’t work. So, the way that we can get out there is through LTE,” Sondag said.
“I go places in St. Louis where I get more bandwidth from my wireless connection than I get from my U-Verse.”
He said demand for wireless Internet services has grown exponentially in recent years, which has driven investments.
“Over the last four years, we have seen the amount of data running over our wireless networks increase about 20,000 percent,” Sondag said, noting capacities will continue to be stretched with advances in smartphone technology. “We are facing what I call a data crunch, and that is really driving us to say, ‘We have to invest and we have to get more bandwidth out there,’ because quite honestly, that is what our customers are demanding.”
Bennett said the needs of Mediacom’s residential and commercial customers are changing, and its investments are a reaction to those demands.
“It is not uncommon to see four or five devices requiring Internet bandwidth in one home,” Bennett said.
In the southwest Missouri market, Bennett said Mediacom serves 2,600 commercial customers and 41,000 residences. Cable services comprise 34 percent of the market, he said, down from 37 percent two years ago.
The big broadband fight is happening as national companies such as Google Inc. (Nasdaq: GOOG), and local municipalities such as Nixa (see sidebar on p. 7), are working to find ways to meet potential demand for transmitting more data across fiber optic networks. In the Kansas City area, Google began deploying in November its fiber network that promises gigabit speeds, which is up to 100 times faster than what is available through most current broadband service, according to
Fiber.Google.com.
The FCC has challenged broadband Internet providers and local and state governments to bring at least one gigabit-per-second speed Internet to all 50 states by 2015.
In a Feb. 26 letter supporting the FCC’s challenge, the Fiber to the Home Council Americas said nearly 900 companies across North America provide fiber optic services to residences.
“We have advocated for the expansion of ultra-high bandwidth connectivity for all Americans as a critical future proof solution for growth and competitiveness in a global economy,” wrote Heather Gold, president of the nonprofit that promotes high-bandwidth.
“All fiber networks are essential to education, health care, public safety and economic opportunity.”
Sondag, who declined to disclose market-share data, said consumers benefit when companies fight to deliver services.
“When we go to the rural areas and we bring 4G LTE and higher bandwidth, you know, we have a lot of competitors and they are not just going to sit back and say, ‘I’m going to let AT&T take all this business.’ Just like with Mediacom, we aren’t going to just let them invest and take all the business,” Sondag said. “At the end of the day, the consumers will be the ones to win because like any kind of competition, this will help to decrease pricing and increase services through more bandwidth.”[[In-content Ad]]
