American broadband anxiety remains alive and well in 2017.
Who of us has not experienced stress and anxiety as a result of an unreliable, slow or just plain poor broadband Internet connection? It really doesn’t matter what it is we want to do online or for what reason, feeling trapped with a poor connection and limited or no choices has created a whole new breed of consumer frustration.
In fact, the 2016 American Customer Satisfaction Index (ACSI) Telecommunications Report shows that customer satisfaction with their Internet Service Provider (ISP) “Remain(s) the weakest among the 43 industries covered by the ACSI.’ This should come as no surprise, as the 2015 report found that ‘sixty-one percent of U.S. households have just one or no high-speed Internet provider servicing their region and the lack of customer choice contributes to weak customer satisfaction… Even as Internet usage grows… Customers are frustrated with unreliable service, slow broadband Internet speeds and rising subscription prices – and they resent being locked into service contracts.”
More importantly, the annual ACSI findings are not unique.They align with surveys and reports from across the country, as well as our own experience right here in Ammon, Idaho. Ammon is in the midst of its first Fiber to the Home (FTTH) build out with an initial take rate of just under 70%. Yes, roughly seven out of every ten homes Ammon plans to pass has requested service. If one drives down the completed streets they will find that final take rate actually is actually above 70%, as homeowners continue to ask to be added to the project as they see construction near their property. While it is true that the property count is intentionally low and the highest demand neighborhoods were selected for the project, clearly the Ammon experience warrants a deeper examination.
While one might initially suspect that Ammon is underserved or overpriced considering the demand for municipal fiber. Investigation reveals that nothing could be further from the truth according to a National Broadband Map that has not been updated since 2014. Researching what is available today in Ammon shows that residents have a gigabit cable provider, as well as another wireline provider advertising ‘up to 40Mbps’ along with no fewer than six wireless providers all capable of providing ‘up to 25 Mbps’ and all at competitive monthly rates.
Given this environment, one might next conclude that the City is assuming all of the financial risks for the project and betting on maintaining a specific take rate in order to stay in the black. Neither of those assumptions would be correct. In fact, Seven out of ten residents have signed up to pay an estimated $3,000 installation cost at the time of project completion, or over time via a property assessment that will pay back a 20 year low interest bond. Under the Ammon Model, the residents request fiber construction, pay for it out of pocket, or back it with the value of their property if they desire financing.
Taking these factors into consideration, what is it then that moves a residential property owner with multiple competitive choices today to spend $3,000 to have fiber installed to their home?
Contrary to traditional expectations, our experience in Ammon has been that the consumer does not expect service to their home for free. They understand that they need to pay for it and fully expect to do so. What they want is COST TRANSPARENCY (to know and understand who they are paying for what), CHOICE (in speeds, packages and providers), and reasonable DELIVERY OF WHAT THEY ORDERED. Too often their broadband experience has been similar to comparing the billboard image of a meal with what you pull out of the sack after the drive thru. This desire for more control over broadband services on the part of property owners can be satisfied by a true municipal utility model, or even by an improvement district, cooperative or mutual with the correct underlying framework where the owners have a collective voice in operations and services.
As broadband continues to make the transition from luxury to necessity we are all by perforce becoming more educated, and demanding more insight and control over our services. This represents a two edged sword for providers as the consumer wants more ownership, but may not be prepared or equipped to actually shoulder it.
If the Ammon experience proves anything, it proves that the broadband subscriber of the future is going to demand more control, more choice and more transparency. What models and technologies will be able to meet these demands? Answering this question should be the focus of broadband providers everywhere, because one thing history has proven beyond a doubt: The consumer will always win.
–Bruce Patterson, Technology Director, City of Ammon, ID
For more information, watch our video on Ammon’s broadband model here.