Partners: Comcast Missing Out By Blocking Businesses From New Internet Service

Comcast raised some eyebrows this week when it disclosed top-dollar pricing for its new high-speed Gigabit Pro Internet service, but solution providers said the bigger surprise is that Comcast is leaving money on the table by restricting the service to consumers only.

Comcast's fledgling Gigabit Pro service -- which promises download and upload speeds of up to 2 Gbps and is Comcast's answer to Google Fiber -- has already garnered interest from business users, but those customers cannot purchase it, solution providers said.

"Once the Gigabit Pro Internet service was first announced, we had business customers calling and asking how soon they could upgrade," said Luis Alvarez, president and CEO of Salinas, Calif.-based IT services provider and Comcast partner Alvarez Technology Group Inc. "I think Comcast is going to get a lot of pushback from their business clients asking 'Why can't we get this too?' " he said.

After a few weeks, Alvarez said, Comcast came back with an answer: The carrier said that at least initially, the service was going to be for residential use only. Comcast’s vision for its commercial clients was still going to be its fiber network, and it wouldn’t offer the same hybrid service to business customers that is was offering to residential customers.

"I don't think they are going to be able to keep that stance for too much longer," Alvarez said. "The reality is that a lot of businesses are going to want these residential services … and there are a lot of small businesses being operated out of homes."

Comcast’s Gigabit Pro Internet service will be the carrier's fastest consumer broadband option yet. The service will be priced at $299.95 per month, plus $1,000 in installation and activation fees, the company disclosed Tuesday. Residential customers will also have to sign a two-year contract for the service, which is available only in select cities in seven states.

Google Fiber is a residential Internet and cable service launched in 2011. The Internet service, boasting speeds of up to 1 Gbps to consumers for $70 a month, is now available for small businesses for $100 a month.

Comcast has no plans to make Gigabit Pro available to business customers. "We provide a full suite of fast, reliable and secure connectivity options -- at speeds up to 10 Gbps -- to business customers through Comcast Business. Gigabit Pro is only available for residential use," said a rep for the carrier in an email to CRN.

That's because Comcast wants to protect its existing fiber network that its business services run on, one partner suggested. "If they offer [Gigabit Pro] to businesses, they will cut into their fiber business, which makes them more money," said Jeffrey Lee, vice president and chief technology officer for Carceron, an IT managed services provider and Comcast partner.

Atlanta-based Carceron regularly recommends Comcast's 100 and 50 Gbps packages for its business customers. Like many business-grade carrier services, Comcast’s business services also include static IP addresses, a feature the Gigabit Pro service doesn't provide.

"I think the Gigabit Pro service is really complementing the streaming service Comcast is offering to the cord-cutters, the [consumers] who are picking the content they want -- like HBO Go -- to save money on cable bills,’ Lee said.

According to Comcast, installation of the Gigabit Pro service will take six to eight weeks -- and potentially longer -- to complete. Additional equipment, taxes, fees and other extra charges also apply. Gigabit Pro is not a part of any Comcast bundle offering, and XFINITY TV, Voice or Home services must be purchased separately. The high speeds associated with the service are also not guaranteed by the carrier.

Eligible residents must live within a third of a mile of Comcast's fiber network. The company does plan to roll out the service across all of its service areas sometime in the future, Comcast said.

With Google entering the Internet service provider space, Comcast most likely felt the pressure to offer residential Gigabit services sooner than they would have liked, Alvarez said.

Many residential Comcast customers rely on the carrier for not only Internet service, but also subscription TV services bundled in at a reduced price. If consumers move away from using Comcast for Internet services, they could also move away from Comcast for TV in favor of services like Direct TV, Dish or streaming services.

"I think Comcast is fearful that they are going to be losing a significant component of their subscriber base, so it's in their best interest to offer comparable [Internet] services to [those of] Google," Alvarez said.

But many consumers won't see a need an Internet service that is close to 200 times faster than what the average U.S. household is used to, Alvarez said. The $300 a month price after installation and activation won’t be appealing to most residential Internet users, he said,
adding that it's not attractive compared with the sub-$100 price tag Google is offering for its service.

However, because there are plans to expand the reach of its Gigabit Pro services, and because it offers 2 Gbps over Google’s 1 Gbps, Comcast could have a leg up over Google, Lee said.

"I think it's mostly a PR thing for Google. They won't make money off of their services," he said.

PUBLISHED JULY 15, 2015