How Small and Midsize Businesses will Benefit from Gigabit Internet
Posted July 29, 2016 by Jeremy Wanamaker
The arrival of low-cost Gigabit Internet is going to be a game changer for small and midsized businesses. Cloud service adoption has been steadily gaining traction over the last few years, but the widespread availability of Gigabit Internet service will kick it into overdrive. Low quality Internet connections have hampered cloud service adoption because of poor user experience. Cloud-based email and browser-based SaaS run well over cable or DSL. However, real time and high-performance applications such as hosted phones and video conferencing often suffer from poor performance when run on a low-end connection.
Until recently, small businesses had two options for Internet service. At the low end of price and quality are cable and DSL. Typically costing less than $500 per month for Internet and phone service, these circuits provide adequate bandwidth for email, web surfing, downloading software, and streaming audio. These low-cost connections do not include service-level-agreements (SLAs) or guaranteed bandwidth. They share total bandwidth across multiple addresses, and are susceptible to weather-related service degradation and outages. Some low-end services offer high download speeds (in Charlotte up to 300Mbps with Time Warner Cable), but offer relatively slow upload speeds. Cable and DSL customers often find the advertised speed is not the observed speed.
Megabits per second in telecom can be compared with megapixels in digital cameras. More is not always better. Just like a high-megapixel camera with a low-quality lens will deliver mediocre pictures, a high-speed Internet package with a low-quality physical connection (i.e. cable or DSL) will deliver a low-quality Internet experience. Conversely, a high-quality 10Mbit Internet circuit generally delivers a better user experience than a 100Mbit cable Internet circuit.
High-end Internet options for business include T1, T3, and fiber-optic circuits. T1 connections are very low bandwidth by today’s standards, at 1.5Mbit/sec, and the cost is often around $500/month. The benefit of T1 over cable or DSL is guaranteed bandwidth, lower latency, and a service-level-agreement, usually around available bandwidth, latency, and uptime.
Fiber-optic Internet from legacy telecom providers such as Windstream, Level 3, and various regional telecoms offers speeds up to one gigabit, but the price-point is usually out-of-reach for consumers and small businesses. While prices on these legacy fiber circuits are dropping, they are still very expensive. It’s not uncommon to see a 10Mbps fiber circuit for $1000/month. Like T1 circuits, legacy telecom fiber circuits are very reliable. Service levels and bandwidth are guaranteed. Other voice and data services, such as PRI and MPLS can be added for low-latency, high-security connections between business offices.
Google Fiber, AT&T Gigapower, and the slower but still pretty fast Verizon Fios are each “new fiber” products. These new fiber providers offer the high-speed and high quality of legacy telco fiber, at a price that is similar to cable and DSL. Advantages of these new fiber connections include:
- High speed up to 1 Gigabit per second. You can download a 100 Gigabyte 4K movie in about 15 minutes. For those checking my math, 1 Gigabyte equals 8 Gigabits.
- Low and predictable latency. Latency is the time it takes a data packet to make a round trip across the Internet.
- Low cost. About $100/month for 1000 Mbps. Legacy providers charge $1000 for 10 Mbps. New fiber providers offer 1000 times better value!
- Symmetrical bandwidth. When download speed and upload speed are the same, the connection is symmetrical. While not important for web browsing and email, symmetrical bandwidth is important for some cloud services.
Now the disadvantages:
- No service-level-agreement. This means the quality and speed of the service is not guaranteed.
- Internet only. Private data (such as MPLS) and legacy voice circuits (PRI) are not available.
- Limited service areas.
Although the disadvantages, on particular the lack of SLA, might make some businesses anxious, there is no question that the value of the “new fiber” providers is extremely appealing. So the question becomes, how will this new capability enable small and midsize businesses in new ways? What killer-apps will it enable?
First, Gigabit Internet services will enable widespread adoption of cloud services, including those services which have until now performed poorly in the cloud.
Adoption of cloud-based SaaS will continue to expand, particularly email and vertically-targeted ERP and CRM applications. These applications are typically delivered via a web browser or lightweight desktop application. These types of applications do not typically require high-bandwidth Internet circuits, so Gigabit Internet will not necessarily help speed their adoption. However, it will improve the perceived performance and stability of SaaS applications.
Cloud-based IT Infrastructure services will be enabled by Gigabit Internet. While some cloud-based infrastructure services, such as cloud-based backup, have been available for over a decade, running a full stack of infrastructure in the cloud has not yet been widely realized. There are two reasons for this. First, the available bandwidth to host infrastructure in the cloud has not been available at a price-point that small and midsized businesses can afford. Second, renting cloud-based infrastructure does not deliver enough cost-savings to justify the investment. Gigabit Fiber solves the bandwidth piece. As the cost of delivering cloud services continues to drop, the cost of renting IT infrastructure will too, which means Infrastructure-as-a-service will finally become a viable option for small and mid-sized businesses.
Hosted business phone service will finally become as reliable as traditional PBX. Hosted voice, with the phones on the desk and the phone system in the cloud, has been a mixed bag, with poor performance happening if it is run over DSL or cable Internet. Voice traffic is extremely sensitive to latency, and low-quality Internet circuits are often incapable of delivering low and predictable latency. Hosted voice on a high latency circuit leads to audio interruptions and dropped calls. Some businesses tried and abandoned hosted voice because of quality problems that occurred due to high latency. Gigabit fiber will enable reliable hosted voice service.
High definition video conferencing will also become more commonplace. The cost of videoconferencing has dropped tremendously as newcomers such as Zoom and Bluejeans aim to take market share away from the traditional players such as Cisco and Polycom. HD videoconferencing has been proven to lead to better participant engagement than teleconferencing. I can personally attest to its effectiveness because I use it every day to connect between our Charlotte, NC office and our Albany, NY office. Once small businesses realize the power of video conferencing, and have the Internet circuit to enable it, the technology will become as commonplace as teleconferencing is today.
Without a doubt, other cloud-based services, including must have “killer apps” will become available as Gigabit Internet deployment becomes widespread. As Gigabit Internet starts to make inroads into homes and apartments, mobile workers will become even more enabled.
While Gigabit Internet will change the way we use and consume information services, there is a risk that adoption will be limited due to low availability. Verizon Fios was the first generation of low-cost fiber-to-the-premises. Those people I know who have access to Fios love the service. It’s low cost, extremely fast, and extremely reliable. Unfortunately, the roll-out of Fios services was spotty in many markets. People found that their neighbors had access to Fios but it was unavailable for them. Verizon also would not publish maps of service areas or expansion plans, leaving potential customer to wonder if they would ever get access to the service.
According to several broadband industry blogs, the deployment of AT&T’s Gigapower product suffers from similar availability issues. AT&T claims deployment is ongoing in several cities, but they provide no maps or statistics about availability. The only thing potential customers can do is check availability at a specific address.
Google Fiber is being more transparent about deployment and availability. Google Fiber has made significant progress in its first-wave cities, including Austin, Kansas City, and Provo, even publishing maps of “fiberhoods” where fiber is available. The Google Fiber rollout in Charlotte has just begun and the map of fiberhoods is not yet available. However, there is a map of apartments where fiber is available or soon-to-be-available.
This map gives those of us eager to get Gigabit Internet an idea of where the service will be available first in Charlotte.
Google may also be considering alternative methods for delivering their Gigabit Internet into homes. Alphabet Chairman Eric Schmidt hinted that wireless technology may be in play for last-mile delivery of Internet. This could rapidly increase the speed at which Google is able to deploy their high-speed Internet service.
If Google and its competitors can figure out the last-mile delivery problem, adoption will become widespread. Once there is a critical mass of Gigabit Internet subscribers, killer-apps will doubtless begin to appear, leading to more demand from consumers. Gigabit Internet will be seen as necessary rather than just nice-to-have, similar to the way smartphones have completely supplanted traditional cell phones.
The next decade will be the most exciting yet for the technology industry. Gigabit Internet, combined with the emerging technologies of augmented and virtual reality, Internet-of-things, cloud services, and ever-faster computers will enable further gains in business productivity and greatly improved entertainment options.
We at CNS are excited about the opportunities Gigabit Internet brings to our business and our clients’ businesses. As a Google Fiber Technology Partner, we are excited to help our customers in Charlotte take advantage of the opportunities Google Fiber offers.