Installing aerial fiber optic lines for the Sonic.net trial project
American ISPs have convinced us that Internet access is expensive—getting speeds of 100Mbps will set most people back by more than $100 a month, assuming the service is even available. Where I live in Chicago, Comcast's 105Mbps service goes for a whopping $199.95 ("premium installation" and cable modem not included). Which is why it was so refreshing to see the scrappy California ISP Sonic.net this week roll out its new 1Gbps, fiber-to-the-home service… for $69.99 a month.
Sonic.net has been around since 1994, selling DSL service in California, but it has recently expanded into fiber; the company has even secured the contract to manage Google's own 1Gbps fiber network that will connect 800+ faculty homes at Stanford University.
Sonic.net's new approach to broadband involves stringing its own fiber lines to homes and offering bargain-basement pricing; indeed, the new 1Gbps offering is the same price as the company's earlier bonded 40Mbps DSL offering (in which two phones lines each provide 20Mbps of bandwidth to a home). The price even includes home phone service.
Is this really a sustainable model? After all, Comcast offers 1.5Mbps service for a list price of $40; Sonic.net's new offering is more than 600x faster at only twice the price.
Dane Jasper, Sonic.net's CEO, tells me that the new fiber-to-the-home deployment is a trial and will reach about 700 homes when complete. "Honestly, only as those wrap up will we have a complete picture of the economic model," he says. "But I believe that fast service for a low cost is possible."
If the pilot in Sebastopol, California goes well, Sonic.net hopes to expand the service across the region.
Jasper doesn't think like a typical US Internet exec; in an interview last year, he made clear that his company tries to avoid artificial limits as a way to make more money. "The natural model when you have a simple duopoly capturing the majority of the market is segmentation: maximize ARPU [average revenue per user] by artificially limiting service in order to drive additional monthly spending. But fundamentally this is the wrong model for a service provider like us, and we have looked to Europe for inspiration… I believe that removing the artificial limits on speed, and including home phone with the product are both very exciting."
Though the current trial is small-scale, Sonic.net's pricing reminds us just how much room there is in the US Internet market for truly disruptive pricing of the kind that Google has been promising—but on a much larger scale—with its 1Gbps fiber builds in Kansas City, Missouri and Kansas City, Kansas.
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