Cablevision has Fastest Broadband in the U.S. - Page 2

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But maybe people have the speeds that they want. "In our surveys, about 70 percent of customers don't even know what broadband speed they have," said Leichtman.

Those that know what they have and want faster speeds are not willing to pay for them. "About one-quarter of customers want more but few are willing to even pay $10 for more bandwidth," he said.

Perhaps that's because in the past, the cable companies managed to increase speeds without increasing prices. "Cable companies offered 1.5 Mbps, then 6Mbps, then 9Mbps, then 12Mbps -- all at virtually the same price," Leichtman noted.

In Amsterdam, customers who have the option of paying for 100Mbps often choose the cheaper 20Mbps option, a recent BBC blog note found .

The price of Cablevision's offering is a problem, said S. Derek Turner, research director of media diversity advocate Free Press. "These days, lower prices are just as important as faster speeds," he said.

He added that he hoped Cablevision would deliver on today's announcement. "We are encouraged by Cablevision's plan to set a new high-speed bar of service for the cable industry. If they will actually deliver the speeds and unlimited capacity they advertise, this is a long overdue step in the right direction."

The broadband services of the future

Cablevision has won nothing today if it cannot sell its new service. If operators want to sell fat pipes, they need to sell the applications that require them, and they can do that if they're willing to change. While the cable and phone companies duke it out, they have a lot to learn from each other, said Michael Khalilian, chairman and president of the NGN and IMS Forum, which works on improving the delivery of applications over the networks of the future.

Phone companies have learned how to deliver stable bandwidth with QoS for applications. "Five nines reliability -- 99.999 percent uptime -- was a telco requirement, not a cable requirement," he said.

Cable companies have figured out how to deliver bandwidth to the home. "The last mile in the majority of ILEC RBOCs [Regional Bell Operating Companies, of which there are now only three] in North America is still twisted pair copper," Khalilian said.

In contrast, he noted, cable companies have deployed fiber to the curb in many areas, and to the head end in most.

But cable companies never had to worry about QoS in their cable business. "Cable companies didn't care if the channel got fuzzy or if the picture went in and out. But if the same thing happens to voice, the call is dropped. You cannot do that," Khalilian said.

"Unless the telco and cable groups figure out how to work together, we'll get all our content from our mobile devices," he said. "The future will go to Google, Yahoo, Skype, and the new upcoming mobility groups."

He pointed to the success of Apple's iPhone store, which has recorded over a billion downloads and offers over 35,000 applications after just nine months in business.

The key to its success, he said, is the availability of free apps. "Half of the apps are free. I can promise you that if all were paid, you wouldn't see that much creativity and you wouldn't see the iPhone hype. The fact that a lot of the apps are free motivates people to buy the iPhone. It's a differentiator," he said.

Cable and phone companies, then, need to find their differentiators. They are struggling with their business models and considering usage-based pricing for bandwidth.

Khalilian said that they need to give something away. Usage-based pricing would limit creativity and growth. "They need to adopt some give and take logic. If I give away the bandwidth these applications need, I can charge for applications and services."