April 16, 2013 | By Sean Buckley
In our new report, Comparing broadband pricing: where do AT&T, Verizon, Cincinnati Bell and others stand?, FierceTelecom looks at how U.S. broadband providers are pricing their consumer standalone broadband services.
Building broadband value is important not only for Tier 1 telcos that serve larger markets, but also smaller Tier 2 and 3 telcos that see broadband service as part of a bigger strategy to step outside their traditional voice-centric telephone company shells.
The price of broadband really depends on a number of factors, including access method (DSL or fiber to the home), speeds, bundles, and contract terms.
On the access end, we saw a noticeable gap between what a telco charges for DSL versus fiber to the home (FTTH) services.
Lumos Networks (Nasdaq: LMOS), a service provider that serves mainly smaller rural markets in Virginia, offers a 6 Mbps DSL service for $34.95, while the first tier of its Broadband XL FTTH service is $54.95 a month.
The other factor is the bundle. While not all subscribers like or want bundles, many telcos will give users a discount on broadband service if they purchase their broadband service as part of a dual- or triple-play bundle.
AT&T (NYSE: T) offers a triple-play bundle with U-verse TV, its Max Plus 18 Mbps broadband tier, and a 250 minute wireline voice plan with 20 calling features for $109.99, while a standalone 18 Mbps offering costs $56 a month.
There is value in the broadband bundle, however, for both consumers and service providers alike.
A consumer can gain immediate savings on their monthly bill and have one source to call if they have a problem with their service, while a service provider increases ARPU. AT&T reported in Q4 2012 that subscriber ARPU was $170 and Verizon (NYSE: VZ) saw FiOS average revenue per user of $150. Not far behind AT&T and Verizon was CenturyLink (NYSE: CTL), which reported that more than "90 percent of its Prism IPTV subscribers also purchased broadband service" during the fourth quarter.
Finally, there are the contract terms. To lure new subscribers and even those existing subscribers that want higher service, all of the service providers we profiled offer a promotional period typically of 6 or 12 months. At the end of that period, the price rises.
Cincinnati Bell (NYSE: CBB) offers its 20 Mbps Fioptics FTTH tier for $34 a month for a year. After the one-year trial is over, the price rises to $49.99 a month. Meanwhile, Windstream does raise its promotional broadband prices, but those prices will remain unchanged for the entire time that the user maintains its relationship with the service provider.
In our new report, we examine what all of the top U.S. service providers are offering for either standalone DSL or FTTH services. While this is our first report on broadband pricing, service providers will continue to evolve their broadband pricing schemes and bundled offerings to stay on competitive footing with cable. -Sean
We noticed two key pricing trend differences in developing our report. First, there is a noticeable gap between what a telco charges for DSL versus fiber to the home (FTTH) services.
Verizon, for example, charges $74.99 for its 15/5 Mbps FiOS offering without a contract, while a standard DSL package with speeds from 1-15 Mbps is $29.99. One thing that has caused ire for new Verizon DSL customers is that they can no longer purchase standalone DSL service--they must bundle in phone service, even if they don't want it, from Verizon to get DSL.
Meantime, Cincinnati Bell (NYSE: CBB) DSL subscribers pay the same price--$29.99--for 5 Mbps service as FTTH subscribers receiving 10 Mbps service.
Between carriers, prices for the same speeds can vary wildly. Consumers who crave 300 Mbps download speeds in a Verizon FiOS service area will pay around $205 per month, while those in Lumos Networks' (Nasdaq: LMOS) serving area must shell out $750.
Second, bundles and contracts can affect broadband pricing.
All of the service providers in our report offer discounts if subscribers are willing to adhere to a contract and purchase a dual- or triple-play bundle. AT&T offers a triple play bundle with U-verse TV, its Max Plus 18 Mbps broadband tier, and a 250 minute wireline voice plan with 20 calling features for $109.99, while a standalone 18 Mbps offering costs $56 a month. Likewise, Verizon offers a FiOS bundle for $89.99 a month with a two-year contract.
In this report, we look at what are carriers charging their subscribers and how those rates differ from carrier to carrier. We compared the prices that each service provider is offering for either standalone DSL or FTTH service, and the length of time that these prices will remain constant.
Take a look at these ILEC broadband pricing metrics in charts below. The first chart lists pricing by each carrier for common broadband speeds. All speeds are for fiber-based broadband, purchased as a standalone service, unless otherwise noted. The remaining charts break out speed tiers and pricing for each carrier we studied in this report.
| 3 Mbps | 10 Mbps | 25 Mbps | 100 Mbps | |
| AT&T | $41 | $51 (U-verse FTTN) | $66 (U-verse FTTN) | |
| Verizon | $29 (DSL) | $49 | $59 | $129 |
| CenturyLink | $50 (12 Mbps ADSL) | $60 (20 Mbps FTTH) | ||
| Windstream | $50 (DSL) | $55 | ||
| Frontier | $55 | |||
| TDS Telecom | $35 (DSL) | $25 (FTTH) $40 (DSL) | $30 (FTTH) $34.95 (18-25 DSL) | |
| FairPoint | $36 (DSL) | |||
| Consolidated | $30 (DSL) | |||
| Cincinnati Bell | $30 (DSL) | $39 | $249 | |
| Lumos Networks | $55 | $80 (30 Mbps) | $380 | |
| HickoryTech | $50 (DSL) | $60 (DSL) | $80 (20 Mbps) | |
| Shentel | $40 (DSL) | $60 (DSL) | ||
| Hawaiian Telcom | $28 (11 Mbps) (DSL) | $58 | ||
| All speeds are fiber except where noted. Prices rounded up to the nearest dollar. | ||||
And here are the details for each carrier:
| AT&T continues to build out its fiber to the node (FTTN) based U-verse product, reporting 8 million subscribers in Q4 2012. The provider sees a much higher ARPU from its U-verse base: $170 versus $105.63 from its approximately 8.8 million DSL subscribers. | ||
| U-verse | ||
| Max Turbo | 24 Mbps | $66 |
| Max Plus | 18 Mbps | $56 |
| Max | 12 Mbps | $51 |
| Elite | 6 Mbps | $46 |
| Pro | 3 Mbps | $41 |
| * Standard DSL | ||
| DSL Direct Elite | 6 Mbps | $34.95 |
| DSL Direct Pro | 3 Mbps | $29.95 |
| DSL Express | 1.5 Mbps | $24.95 |
| DSL Direct Basic | 768 Kbps | $19.95 |
| * prices good for 6 months | ||
| Verizon made a bold move in 2012, adding its Quantum tiers and upping existing speeds in its FiOS areas. Residential subscribers can now get up to 300/65 Mbps. During Q4 2012, the provider added 144,000 net new FiOS Internet connections and 134,000 net new FiOS video connections. | ||
| * DSL Services | ||
| Standard | .5 to 1.5 Mbps | $19.99 |
| High Speed Internet Enhanced | 1.1 to 15 Mbps | $29.99 |
| ** FiOS (FTTH) | ||
| 15/5 Mbps | $74.99 | |
| 50/25 Mbps | $84.99 | |
| 75/35 Mbps | $94.99 | |
| 150/65 Mbps | $134.99 | |
| * requires phone line ** standalone w/out contract | 300/65 Mbps | $205 |
| CenturyLink added 41,000 broadband subscribers in Q4 2012 to bring its total to 5.85 million. The telco sees a 90% attachment rate with IPTV purchases. | ||
| ADSL2+ Services | ||
| Fast | 1.5 Mbps | $40 |
| Faster | 7 Mbps | $45 |
| 12 Mbps | $50 | |
| FTTN (VDSL2 hybrid) | ||
| Fastest | 20 Mbps | $60 |
| 40 Mbps | $70 | |
| Windstream's consumer broadband service revenues rose 5 percent year-over-year to $116 and $457 million for the year 2012. However, it reported that it lost about 2,000 broadband subscribers, ending Q4 2012 with a total of 1.21 million subscribers. | ||
| * DSL Services | ||
| HSI (High Speed Internet) | 3 Mbps | $49.99 |
| HSI Plus | 6 Mbps | $54.99 |
| HSI Flash | 12 Mbps | $54.99 |
| * after 12 months (price guaranteed for life) | ||
| Frontier continued to see modest gains in broadband subscriptions in Q4, adding 5,300 new customers. At the end of Q4 2012 it had a total of 1.8 million broadband subscribers. | ||
| DSL services and FiOS FTTH in select markets | ||
| 6 Mbps | $19.99 | |
| 25 Mbps | $54.99 | |
| With TV bundle | 15/5 Mbps (FiOS) | $119.99 |
| TDS Telecom lost 1,400 and 700 CLEC broadband subscribers in Q4 2012, ending the quarter with a total of 299,900 subscribers. It reported that ILEC triple-play service penetration, which includes triple-play bundles of voice, video (satellite or IPTV), and data was 31 percent in its markets. | ||
| DSL Services | ||
| Lite Prime | 1 Mbps/512 kbps | $9.95 |
| Express Prime | 2-15 Mbps | $14.95 |
| Turbo Prime | 8-15 Mbps | $19.95 |
| Extreme Prime | 18-25 Mbps | $34.95 |
| FTTH Services | ||
| Turbo Prime | 10 Mbps | $24.95 |
| Extreme 25 Prime | 25 Mbps | $29.95 |
| Extreme 50 Prime | 50/25 Mbps | $45 |
| FairPoint added 3,816 broadband subscribers in Q4 2012, ending the year with a total of 326,367 subscribers. It has focused on expanding broadband availability in Maine, New Hampshire, and Vermont--three markets it entered when it purchased Verizon's Northern New England assets in 2008. | ||
| DSL Services | ||
| Starter | 768/128 kbps | $21.99 |
| Standard | 3 Mbps | $35.99 |
| Premium | 7 Mbps | $39.99 |
| Ultra | 15 Mbps | $49.99 |
| Consolidated Communications, which expanded its broadband base into new markets including Kansas City, Mo., and Sacramento, Calif., via its acquisition of SureWest, added 11,079 broadband subscribers in Q4 2012. It had a total of 247,633 subscribers at the end of 2012. | ||
| DSL Services | ||
| Triple play bundle | 3 Mbps | $71.85 |
| Triple play bundle | 6 Mbps | $81.85 |
| 10 Mbps | ||
| 20 Mbps | ||
| Cincinnati Bell's Fioptics FTTH service continued to be the dominant driver in the telco's broadband subscriber drive in Q4 2012 as it added 5,000 new subscribers, which offset ongoing traditional DSL declines. It ended the quarter with a total of 259,000 subscribers. | ||
| * DSL (Zoom Town Internet) | ||
| 768/384 kbps | $25 | |
| 5 Mbps/768 kbps | $29.99 | |
| ** Fioptics (FTTH) | ||
| 10/1 Mbps | $29.99 | |
| 20/2 Mbps | $34 | |
| 30/5 Mbps | $39 | |
| 50/10 Mbps | $69 | |
| 100/20 Mbps | $249 | |
| * price good for 12 months ** prices good for 12 months | ||
| Lumos Networks lost 451 rural broadband subscribers in Q4 2012, ending the quarter with a total of 39,950 subscribers. | ||
| Ultra-Fast DSL | ||
| * 6/1 Mbps | $34.95 | |
| ** 6/1 Mbps | $29.95 | |
| Broadband XL (FTTH) | ||
| 10/3 Mbps | $54.95 | |
| 15/4 Mbps | $49.95 | |
| 20/5 Mbps | $79.95 | |
| 50/20 Mbps | $184.95 | |
| 100/40 Mbps | $379.95 | |
| 200/80 Mbps | $599.95 | |
| 300/120 Mbps | $749.95 | |
| * with local phone service ** with Unlimited Bundle | ||
| HickoryTech added 454 broadband subscribers in Q4 2012. However, like other service providers it reported that competitive price compression from local cable operators impacted broadband revenue, which was down 4 percent year-over-year to $4.9 million. | ||
| DSL (Iowa) | ||
| Lite (with phone package) | 384/128 kbps | $26.95 |
| Prime | 3/1 Mbps | $39.90 |
| Pro | 6/1 Mbps | $49.90 |
| DSL (Minnesota) | ||
| Lite | 1 Mbps/512 kbps | $29.90 |
| Prime | 6/1 Mbps | $39.90 |
| Pro | 9/1 Mbps | $49.90 |
| Premium | 20/1 Mbps | $64.90 |
| Shentel, which operates both cable and traditional wireline telco networks, added 216 DSL broadband subscribers in Q4 2012. Although it did not reveal numbers in Q4 2012, the telco has begun rolling out higher speed Fiber to the Home (FTTH) services in select markets in Q4 and throughout Q1. | ||
| DSL Services | ||
| 384 kbps | $24.95 | |
| 768 kbps | $29.95 | |
| 1.5 Mbps | $34.95 | |
| 3 Mbps | $39.95 | |
| 5 Mbps | $49.95 | |
| 10 Mbps | $59.95 | |
| Hawaiian Telcom's Q4 2012 consumer high speed Internet (HSI) revenue rose year-over-year to $9.4 million due to a 4 percent increase in HSI subscribers to about 88,000. The rise in HSI subscribers was driven by high pull-through rates for new video subscribers and an increase in standalone HSI additions. | ||
| DSL Services | ||
| Basic | 7 Mbps | $24.95 |
| Advantage | 11 Mbps | $27.95 |
| Premium | 15 Mbps | $37.95 |
| Extreme | 20 Mbps | $49.95 |
| Ultimate | 25 Mbps | $57.95 |
| Elite | 50 Mbps | $79.95 |
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