Fiber Providers Need to Go Beyond Speed for Differentiation, Consultant Says
40 percent are unsure of their home internet speeds, said Jonathan Chaplin of New Street Research.
WASHINGTON, November 9, 2022 – Despite fiber’s fast broadband speeds, providers must innovate and offer other benefits – like content bundling – to maintain market share as customers increasingly make purchasing decisions based on non-speed factors, argued Jonathan Chaplin, managing partner at New Street Research, a telecommunications and technology research firm.
“Our message to the cable industry is: Stop marketing on speed, put everybody on the gigabit tier, and start differentiating on everything else,” Chaplin said at a Fiber Broadband Association event Wednesday.
Chaplin also urged fiber providers to prepare to enter the wireless market, saying that wireless and broadband will soon “converge into one marketplace.
“It’s not a major differentiator or driver of consumers’ decisions today, but you need to start working on this as a product category to be ready for it by the time it [is],” he added.
And raw speed won’t be enough to attract customers, Chaplin argued. Although consumers say speed and price are the two top factors when considering internet plans, he said, his research shows that 40 percent are unsure of their home internet speeds.
Typical speeds have greatly increased in recent years, and Chaplin said faster service provides no perceptible benefit to most customers once certain speeds are reached. According to his data, “Increases in speed (above 200 Mbps) really have no impact on the satisfaction of a household with their broadband provider.”
Fixed-wireless uptake shows speed isn’t always king
The rise of fixed-wireless providers, who usually don’t advertise on speed, further demonstrates that consumers are willing to make purchase decisions on other factors, Chaplin argued. In fact, his research shows that many new fixed-wireless customers did not make the switch due to speed complaints.
“If you’re in the fiber business, you’re in a strong position. You’ve got a product that wins in the market today, but you cannot afford to be complacent,” Chaplin said. “The battleground for consumers is going to shift and you need to be ready for shift when it comes,” he added.
The Federal Communications Commission is considering a proposal to mandate “broadband nutrition labels,” which proponents say would help consumers understand the details of their internet plans. Researchers at the TPRC 2022 conference in September suggested that such labels should include “interpretive” data to explain the real-world implications of technical metrics. TPRC speakers also echoed Chaplin’s claim increased speeds do not necessarily correlate with higher customer satisfaction rates.
Industry players differ on substantive policy points surrounding the proposal, however, including whether labels should be mandatorily included on month internet bills.
