Comcast Rolls Out 105 Mbps Tier; Is This a Glimpse of the Future?

Comcast is officially rolling out 105 Mbps residential broadband Internet service this morning, dubbed "Extreme 105 Xfinity Internet." The service is available to more than 40 million homes in the U.S. and also features 10 Mbps upstream speed. Initial promotional pricing is $105/mo when bundled with triple play (voice, video, Internet) or $200/mo standalone. Comcast told me that post-promotion pricing hasn't been determined yet, with various price points being tested.

With Extreme 105, Comcast becomes the latest broadband ISP to introduce speedier tiers for higher monthly fees. Although I haven't seen any research yet that breaks down how many broadband subscribers have migrated to these premium tiers, for now the amount is probably relatively small. However, that could change fast, as an extremely interesting substitution dynamic between video service and broadband service starts to take hold.

As Comcast correctly points out in its blog post explaining Extreme 105 today, the reality for many families these days is that multiple devices are connecting to the Internet simultaneously, with some family members streaming or downloading video to iPads/laptops/connected devices while others are trying to get some work or homework done online. All of this is driving up the requirements many homes have for faster Internet service.

Meanwhile, with the proliferation of entertainment services like Netflix, Hulu Plus, YouTube, etc. time is being shifted from traditional TV viewing. All the while families continue evaluating their monthly budgets and spending for various services in the context of their usage patterns and financial constraints. As a result, it is very reasonable to believe we'll start seeing a scenario where families shift some of their traditional spending on video services to faster Internet service. Does that mean outright cord-cutting? Maybe, but not exclusively. In the short-term, more likely it means paring back on premium channels, additional outlets and other goodies that will increasingly seem like unnecessary expenditures. For pay-TV companies like Comcast, the shift in subscriber dollars to higher-margin broadband services is not necessarily a bad thing either, though they'd certainly like to avoid any service reductions.

All of this underscores how the Internet is becoming more central to our lives, and how broadband ISPs will increasingly offer faster/more expensive tiers that cater to subscribers' changing needs. While some see a world of bandwidth caps and throttles (as evidenced by AT&T's recent decision to charge heavy users), I continue to see escalating usage as a big new opportunity for broadband ISPs. In this respect, Comcast and others are on the right track with faster service tiers. The only issue I have is that Comcast hasn't raised its 250GB/month consumption cap for Extreme 105 users. I'm not sure why, but in my mind that's a mistake; for premium subscribers paying more (and inevitably using more!), they should also get a bump to something like 500GB or more per month. I'm guessing that will come in time too.

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Categories: Broadband ISPs

Topics: Comcast, Xfinity