Both BusinessWeek and Gigaom.com have recently run pieces asking whether consumers need all of the speed that the new Verizon (VZ) fiber-to-the-home product will offer. The new Fios system can run at 30 megabits a second, Cable broadband runs at about 6 Mps, but with some upgrades that can be sped up substantially.
The difference between the cable broadband and Fios is that the cable guys are not spending $24 billion to put in a system that can reach 18 million households.
The Verizon project is likely to be a very high-priced failure, which raises the question of why its stock trades at $43, right around its 52-week high. Not only does the new Fios system offer very little to the typical consumer, but cable is taking the phone company landline customers away at an alarming rate buy offering VoIP. Comcast (CMCSA) signed up over 500,000 new VoIP customers in the first quarter.
BusinessWeek asked the right question. Do consumers know how fast their broadband connection is? Do they care? Almost certainly it does not matter to the typical residential customer as long as he can watch YouTube and play online games. The rest of what he is likely to do requires very little bandwidth at all.
Having a car that will go 200 mph is nice. But, where can you drive it?
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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