Forget the "Last Mile," it's The Last 50 Feet of WiFi that Dictates Speed

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Internet service providers have a tough question to answer: How much incremental revenue can ISPs make selling WiFi service?

This may sound like a straightforward question for the folks in the Finance, Sales, and Marketing departments to hammer out and track results; but the Product team is here to tell you that it's trickier than one might think.

The intersection of provisioned speed (up to gigabit bandwidth) and real-world WiFi performance that doesn't keep pace has created an "Expectations vs. Reality" meme-worthy headache for consumers and ISPs alike. 

 Ben Smith  announced  new Hulu features rolling out on May 22. 

Equipment determines the customer experience

 The DOCSIS 1.1 workhorse, Motorola's SURFboard 4100, and Apple's original AirPort WiFi router, launched in 1999

The DOCSIS 1.1 workhorse, Motorola's SURFboard 4100, and Apple's original AirPort WiFi router, launched in 1999

The leased-modem model gives ISPs the ability to ensure that provisioned speeds will be delivered to the home. As speeds have increased-- for instance, the cable industry migrating up the DOCSIS chain-- equipment swaps for existing customers became necessary to deliver higher speeds, while new customers enjoyed the latest hardware.

In the past year, providing the "expectation" of a great internet experience became more complicated for ISPs due to:

  1. Rapidly-escalating provisioned speeds, discussed in a prior post
  2. Aging customer-owned modems
  3. Sub-optimal customer-owned WiFi equipment
  4. Challenging home environments with WiFi-impeding objects like... walls

Next-generation WiFi arrives

Whether it's called a "WiFi system," or "mesh networking," or "whole-home WiFi," the basic, underlying technology of a robust WiFi network has grown beyond a single, integrated router to include a network of nodes working together to provide seamless delivery of speedy internet. PC Magazine does a solid job explaining the underlying tech and reviewing a number of consumer WiFi systems on the market today with prices ranging from $170 to $450

Better WiFi: a monthly fee or outright purchase?

ISPs have already made a solid business leasing modems with integrated WiFi and selling that wireless component the same way DVR service can be added on a set-top box. The question remains, will consumers pay even more to receive better WiFi?

Three choices have emerged for customers to upgrade to the latest WiFi system technology:

  1. Consumer-purchased WiFi systems like eero ($400,) Google WiFi ($279,) or Netgear Orbi ($286) in 3-pack configurations
  2. ISP-leased equipment with monthly fees ranging from $4 to $10/month in addition to existing modem lease and WiFi service fees
  3. ISP-sold equipment, such as the xFi pods, avoiding the recurring charge on a monthly bill
 Comcast launched  xFi pods , based on Plume technology, for purchase at a "below-market" rate (compared to other retail options) of $119 for a 3-pack of pods. In Canada,  Bell  leases a 4-pack of the same pods for $5/month. 

Comcast launched xFi pods, based on Plume technology, for purchase at a "below-market" rate (compared to other retail options) of $119 for a 3-pack of pods. In Canada, Bell leases a 4-pack of the same pods for $5/month. 

Opportunity to meet speed expectations

Pushing the best internet experience all the way to a device-- wherever it may be in a home-- may represent a churn-reduction opportunity for ISPs if the customer perceives the benefit was delivered by his or her ISP. The provider who ensures top speeds emanate beyond the room in which the modem/router sits will be making the "Reality" of speed-delivered match the "Expectation." Whether customers will pay an additional monthly fee (or make a one-time purchase) to enjoy the upgraded experience remains an open question. 

At Telogical, we’re always studying the competitive landscape. If you have a topic you’d like to discuss with us, please reach out. We look forward to working with you.


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