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More on Speed: Just How Satisfied Are Customers?

June 2nd, 2010 by Joel Gurin - Chief of the Consumer and Governmental Affairs Bureau

Our survey report on broadband speed yesterday attracted national attention and some additional questions. We've been asked for more detail on our findings about customer satisfaction with broadband speed. As we reported, 91 percent of fixed broadband customers are "very" or "somewhat" satisfied with that service, compared to 71 percent who are satisfied with the speed of mobile broadband. A closer look gives a fuller picture.

For fixed broadband, 50 percent of customers were very satisfied with the service overall, 41 percent were somewhat satisfied, 6 percent were "not too" satisfied, and 3 percent were not satisfied at all.

For mobile broadband, we asked specifically about satisfaction with speed, a slightly different question. Here, the numbers were lower: 33 percent very satisfied, 38 percent somewhat satisfied, 8 percent not too satisfied, and 5 percent not satisfied at all. (The other 14 percent said they didn't know.)

What to make of these numbers? A few things.

First, consumers are fairly well satisfied with the speed of the broadband they get at home. Having 50 percent say they are "very satisfied" is a strong showing, although it still leaves room for improvement. Even if people are satisfied with their home broadband speed, however, they may be paying hundreds of dollars a year more than they need to. Consumers still need better information to know what speed they need for the applications they run. And given the split between "very" and "somewhat" satisfied customers, more information on broadband speed would also help consumers choose between different providers.

For mobile broadband, the lower numbers show that this service still has a way to go to improve customer satisfaction - which is especially important as more people turn to mobile for their primary Internet connection. It's technologically harder to deliver high speeds by mobile, so the satisfaction gap between fixed and mobile broadband is understandable. But consider that satisfaction with mobile service overall - not broadband speed specifically - is quite high, with 59 percent very satisfied and 33 percent somewhat so. A decade ago, that satisfaction rate might have been hard to imagine. The wireless industry has made tremendous strides in innovation and service quality overall, and we can expect improvements in mobile broadband speed as well.

Accurate measurements of mobile broadband speed can be a boost to innovation. These measures can help wireless carriers learn more about where their networks function best and where they may fall short. Most consumers now have a choice of mobile broadband providers, and will be able to use these new measures to choose the providers who will serve them best.  Consumer choice, in turn, can increase competition, innovation, and ultimately help lead to better broadband service for all.

[Cross-posted from the Official FCC Blog]

11 Responses to “More on Speed: Just How Satisfied Are Customers?”

  1. Guest says:

    Hi Joel,

    I respect that the FCC is attempting to address the United States falling behind in world broadband rankings, but you're overlooking one major caveat; usage. What good is a 1Mbps connection or even a 50Mbps connection if US ISP place extremely low limits on usage while still retaining a high price. In the case of ILEC or CLEC, when you have ISP that are also content providers (cable tv, video services), it is in their best interests to introduce data transfer limits for internet usage to protect their own video services against the emergence of online competitors like Hulu and Netflix. As you are likely aware, online video services require high amounts of bandwidth. Streaming a compressed high definition movie making use a codec like H.264 can use between 6Mbps-12Mbps. Now if you put this in context, that single movie may require anywhere from 6GB-13GB or more of data transfer. What if your ISP has a data cap of 5-40GB on the low end $40/mo tier? Your ISP has successfully eliminated or discouraged you from seeking out services from online competitors. The effects of data caps may not be very apparent to some people today, but what about two years from now? What about five years from now?

    In 2008, Dave Burstein of dslprime.com wrote, "Tony Werner, now CTO of Comcast, three years ago included cost data in a financial presentation for his then employer, UPC, the largest cable company outside the U.S. Working from his numbers, DSL Prime reported a 10 cents per gigabyte figure. The article was factchecked before publishing by UPC. Since then Moore’s Law has reduced reduced that figure to 4-7 cents." Two years have passed since this comment was made. You can assume that an ISP's cost per gigabyte has fallen even further than the "4-7 cent per gigabyte" figure.
    http://stopthecap.com/2008/08/04/frontier-now-with-prices-up-to-1080-per-gigabyte-limit-five-gb/

    What makes usage caps even more outrageous is that networking technology is exceeding the pace of Moore's Law by close to 47x. Networking capcity continues to increase exponentially, driving costs down, yet residential ISP in the United States that maintain monopoly/duopoloy status do not regularly pass on these cost savings. There is sufficient competition at the NSP level, but regional ISP often maintain franchise agreements that protect them from competition.
    http://blogs.cisco.com/datacenter/comments/networking_delivering_more_by_exceeding_the_law_of_moore/

    Last year Time Warner tried to introduce caps in several markets. It wasn't until Senator Chuck Schumer of NY threatened Time Warner with regulation that they eventually backed down. However, in other markets, caps are still common.
    http://arstechnica.com/tech-policy/news/2009/04/the-price-gouging-premiums-of-time-warner-cables-data-caps.ars

    To make matters worse wireless phone providers like AT&T are now jumping on the same data cap bandwagon by removing unlimited data plans, and charging more for less service.
    http://www.engadget.com/2010/06/02/atandt-makes-sweeping-changes-to-data-plans-iphone-tethering-comi/


    A Practical Example of the Monopoly/Duopoloy effect in action
    -------------------------------------------------------------
    If you're looking for an example of how areas in the United States are absent of competition you have to look no further than Alaska. Cable company GCI in Alaska is a perfect example of an ISP that has charged their customers prices way above industry averages and capped usage on residential customers.

    GCI's unbundled internet offerings (notice the price and allocated usage)
    http://www.gci.com/forhome/internet/standalone_modems.htm

    GCI's bundled internet offerings (prior to 4/20/10 GCI advertised these services as "unlimited downloads" )
    http://www.gci.com/forhome/internet/bundles_high_speed_modems.htm

    GCI used an incentive of "unlimited downloads" on bundled internet service tiers to convince customers to buy their "ultimate package" bundle (cable tv, POTS, long distance).
    As of 4/20/10, GCI changed their ToS, and updated their website to remove almost all references to "unlimited downloads". GCI has now placed the same paltry limits on usage as their unbundled service tiers.
    http://portal.gci.net/usage/fair_use.html

    A normal counter argument, would suggest customers to vote with their wallet and seek out local competition. What if there is no competitor? What if the local competition offers services that were competitive in 2000, not 2010?

    ACS internet offerings (notice the forced bundling with POTS, and speed tiers)
    http://www.acsalaska.com/personal/internet/high-speed/bundles.asp

    ACS's lowest speed tier doesn't even meet the FCC's own qualification of broadband at 768Kbps downstream.
    http://www.engadget.com/2008/03/19/fcc-redefines-broadband-to-mean-768kbps-fast-to-mean-kinda/

    As a residential customer what options are we left with? Do we pay exorbitant rates from the local CLEC and face limited data caps on usage, or do we pay exorbitant rates from the ILEC for forced bundling and speed tiers that were competitive 10 years ago?




  2. Guest says:

    "Because of our respective useage patterns, your throughput every month is ten times mine. Tell me again why it is that you and I should pay the same price?"

    You sound like a shill for the industry with that statement, same as those defending the metered iPhone plans that AT&T has put into effect while claiming it's a benefit for their customers and will save them money even though everyone that's researched growth patterns can see that limit will easily be exceeded in 1-3 years as smartphone users consume more online services.

    As for cable providers like GCI exploiting their monopoly, for users like you that are so concerned about what other people are doing, you can simply opt for a metered plan (those were always available in the unbundled package with GCI) or a slower Mbits plan. Customers on the more expensive bundle plans are already paying their fair share, they're already under the supervision of network admins watching for problems like unsecured routers.

    Providers want to brainwash people like you thinking these plans are in their best interest, in fact their statements to stockholders expliciting speak about their need to "re-educate" consumers out of unlimited all you can eat plans because they'll extract more profits that way.

    Rather than segmenting with lower plans that are slower or metered with smaller per GB limits, and then offering faster or unlimited plans on higher levels that would be more fair and easier to understand by customers without shocking bills when their system misreads usage, or you simply stream a few more movies than "allowed", they implement low limit caps across all their customers.

    Welcome to 1990 when your kids had small cellphone minute plans and ran your bill into the hundreds of dollars, or when you rationed your cell time like it was a rare commodity, watching the clock till 9pm on the weekend for free minutes..

    Profits have been rising for these providers for years, and their investment has been steadily decreasing as they stopped buying hardware, stopped expanding, laying off workers (this was before the recession, and before any proposed legislation).. they want you to believe caps will improve things, when the only thing they'll improve is their bottom line.

    The government, and the FCC need to step in and regulate this market again to level the playing field to bring competition back. When cable companies can be this blatent in their actions and are blocking future IP based competitors such as HULU, and NetFlix with capped usage and forced bundled service plans, it's pretty clear this market isn't working.

  3. Guest says:

    Where can I obtain a list of the various Download and Upload speeds (Kbps) to verify whether they are slow, moderate or fast.

  4. data cable installation says:

    Interesting post... where is the money coming from to fund the suggested imporvements?

  5. Guest says:

    try this: www.testmyisp.com

  6. Guest says:

    www.broadband.gov and this

  7. Guest says:

    I'm very dissatisfied with AT&T DSL! I'm paying for the fastest speed they have (advertised at 6Mbps) and I am consistantly at no more than 3.9Mbps. I download graphic file packages, sometimes as large as 200-300 MB each and I hate that I'm not getting the speed that I pay for!

  8. Web-Meter.com Janet Hanley says:

    I love technology. I was fed up with my browsing experience being blighted by unexplained performance issues. I never felt I was getting the bandwidth that my ISP vendor was charging me for.

    I designed a tool (WebMeter) that allows a simple usable and ongoing comparison of my browsing experience and used it to compare against my friends and colleagues.

    While making use of online Software as a Service (SaaS) I wanted to be sure I was getting billed properly, and that I was getting a good quality and adequate service.
    WebMeter is a sophisticated, easy to use tool which empowers all Internet users with continuous performance data to understand, compare and confirm Internet Service Providers (ISP) and Software as a Service (SaaS) quality of service and billing.

    Download WebMeter today and take control of the quality of your online experience.Are you getting the bandwidth that your ISP vendor is charging you for

  9. Guest says:

    In reply to the Guest comment posted June 06 2010 at 3:23 PM:

    You suggest that because the ISP's cost per gigabyte of transfer capacity is falling and networking technology is becoming more efficient, ISPs should pass along their savings to subscribers. In other words, retail broadband subscriber rates should be FALLING.

    I see this argument in print time and time again, and it makes perfect sense as far as it goes. Here's the part you fail to acknowledge:

    To stay in business, ISPs have to recover their costs. Particularly for wired ISPs, costs are first, foremost and primarily CAPITAL COSTS; bandwidth and other operating costs are a TINY SHARE of an ISP's cost structure.

    Providing broadband service is a CAPITAL INTENSIVE BUSINESS. Not only is it expensive to build a broadband plant (hence the lack of meaningful competition in so many markets; see the term "natural monopoly" in any Economics 101 textbook), but the payback period MUST BE SHORT (and therefore the profit margin high) because technology changes so rapidly that ISPs must continually re-invest in outside plant and Network Operations Center upgrades.

    Further, you argue against usage-based metering. Think about what you're saying for a minute. Let's say you and I both subscribe to a 10 mbps down x 1 mbps up internet connection. I use mine primarily for online learning and academic research -- meaning I download text files and charts and participate in interactive online classes. I also share photos online.

    You use yours to stream high definition video 2-3 hours per day (you don't subscribe to cable, and all that web video is FREE!!!) Your spouse uses it for all-night online gaming sessions 3 nights a week. The two of you have failed to secure your wireless network, so half the other people in your building also use your connection as much as they want.

    Because of our respective useage patterns, your throughput every month is ten times mine. Tell me again why it is that you and I should pay the same price?

    It's true that for BOTH you and me, the ISP's bandwidth costs are small in comparison to its retail rate. But YOU are the heavy user that necessitates the ISP's continued and massive need to add plant capacity. Therefore YOU should pay a larger amount toward that capital cost recovery. When I say add plant capacity, I mean (for telcos) driving fiber ever deeper in to the system, replacing the twisted pair with bonded pairs for last mile, or taking the Verizon Fios route by building full-on FTTP. Or (for most cable companies) upgrading to DOCSIS 3, which means replacing modems, driving fiber deep into the system and drastically reducing the number of customers per node to actually deliver something close to the advertised speeds for the service level you're buying.

    Please, please STOP oversimplifying the argument by failing to understand or acknowledge what an ISP's cost structure actually looks like.

  10. Guest says:

    In reply to the guest says:
    June 07 2010 at 3:28 PM

    Actually if you had read my reply in full, you should have realized that the Alaskan ISP I referenced prior to 4/20/10 only offered "unlimited downloads" tiers for customers that subscribed to GCI's "ultimate package" bundle (cable tv, pots, long distance).

    You casually avoided that the huge costs to maintain regional infrastructure are primarily attributed to cable tv services. The costs to maintain a HFC infrastructure are spread against the various services that use that infrastructure (cable tv, pots, long distance). Those costs are already being paid for when a customer was forced to subscribe to bundled services just to be able to get the option to have an "unlimited downloads" option from GCI (which was removed 4/20/10). Your argument is a red herring.

    Let's move on to your argument about network upgrades. In the case of GCI, during the digital transition a few years back, this particular CLEC freed up a lot of bandwidth on their network by clearing analog spectrum that had previously been used to provide analog video services (cable tv). It was not a requirement for CLEC to transition their private infrastructure entirely digital. Only OTA broadcasts faced an FCC mandate, but this CLEC did benefit from a digital transition. Now we can talk about DOCSIS 3.0. You try and make it sound like DOCSIS 3.0 is a huge cost per subscriber.

    From April 3, 2009 article from the New York Times.
    Mr. Fries of J:Com, is quoted , “To me, this just isn’t an expensive capital investment,” he said.
    "The cable industry here uses the same technology as J:Com. And several vendors said that while the prices Mr. Fries quoted were on the low side, most systems can be upgraded for no more than about $100 per home, including a new modem. Moreover, the monthly cost of bandwidth to connect a home to the Internet is minimal, executives say. "

    http://bits.blogs.nytimes.com/2009/04/03/the-cost-to-offer-the-worlds-fastest-broadband-20-per-home/

    $100 per home for Cable ISP to upgrade to DOCSIS 3.0 vs Verizon's cost of $817+ to wire their customers with FTTP. It sounds like Cable ISP are getting the deal here. It's much easier for a Cable CLEC to recuperate these costs in a short amount of time if their customer retains bundles services.

    What's the average profit on POTS these days? $15+/mo sounds about right. Cable TV services? $30+/mo profit. For internet service? A customer being charged $50/mo for 8Mbps with 60gb of usage you can expect they're turning a profit greater than $35/mo.

    This huge capital expenditure per customer you tout? It's paid off in less than 2 months. Sorry, but you'll have to forgive me for not feeling sympathy for the CLEC on that kind of profit margin.

  11. Dave says:

    As the Commission conducts testing for both fixed and mobile networks, results will be made available periodically starting in a couple of months (once we have begun to compile data). Ultimately, the Commission plans to issue a full report later this year with the results of the fixed broadband testing.

    In regards to the question about funding these improvements, long term measures are still being contemplated. The initial testing that we are doing though is being funded through the American Recovery and Reinvestment Act (ARRA) as part of the National Broadband Plan.

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