1 Gigabit/Second Broadband

Media Minutes for June 17, 2011
Producers: Stevie Converse, Candace Clement

A residential broadband provider in Sonoma County, California, is about to blow the top off broadband service business models and offer a fiber-to-the-home 1 gigabit per second connection that includes two phone lines with unlimited long-distance calling for only $69.95 a month.

How fast is 1 gibabit per second? A full-length DVD can be downloaded in seconds. You can tune into crystal clear HD TV channels with enough bandwidth left over to download and play music, surf the Web, get X-rays from your doctor and have a teleconference for work – all at the same time.

Sonic has its own facilities-based network that offers voice and broadband. And when Sonic begins to roll out its own new fiber network, which is much faster than copper, the price for its voice and data packages will remain the same. Dane Jasper, Sonic’s CEO, says that, as a competitor in the broadband market, he has to think differently and cater to consumer needs.

Dane Jasper: We sort of re-thought the business model and tried to determine what is an exciting and aggressive broadband product – be it on copper or fiber.

With its copper wire connections, Sonic created a popular untiered, uncapped and unlimited data and voice service with a choice of one or two phone lines.

Broadband packages through incumbent AT&T are priced according to broadband speed. But speed isn’t expensive once you have the connection.

Dane Jasper: Someone in one household might be paying $40 and getting a 6 megabit connection, and next door somebody paying $10 less is getting one quarter the speed. And that is not rational. The technology and cost basis for that is not rational. That is market segmentation. The goal there is to get the consumer to open their wallet wider by artificially limiting what is being delivered. And where your cost of goods sold is very low – in other words, bandwidth is super cheap – the creation of that slowdown to get people to spend more money, that market segmentation is rational when you’re an incumbent operator who controls the majority of the market.

Sonic will put fiber directly into 60 homes in the city of Sebastapol. An additional 640 homes are slated to join the project by the end of the year. If the project is successful in growing Sonic’s market share, expansion will continue. So far, so good. Sonic has skyrocketed, it now boasts a staff of 100, and the company is hiring to keep up with the demand.