Convergence service providers -- i.e., cable companies and telcos -- are in for a rough ride as saturated markets, the bad economy and other factors begin to play off each other in what could become a chronic downward spiral. Om Malik, in this post at GigaOm, says that providers already are increasing speeds in an attempt to upsell existing subscribers.
It will be interesting to see how these projects proceed in the poor economic climate -- especially beyond Verizon and AT&T. One company to watch is relatively quiet Qwest. This month, it introduced Connect Quantum (20 Mbps) and Connect Titanium (12 Mbps). This No Jitter commentary says that the service will be based on fiber-to-the-node (FTTN) architecture and will be available to 2 million customers in the company's 23-state service area by the end of this year.
The questions revolve around how much speed people really need and are willing to pay for in an economically challenging time. Wired discusses Verizon's FiOS and a 50 Mbps service Comcast is offering (for $150 per month) in Minneapolis/St. Paul (which is more fully described in The New York Times). The writer repeats the axiom that demand is found for services every time broadband capacity increases.
This trend certainly will be tested in the year ahead. New and exciting services may well be big hits. But the reverse may happen as well. Whether they like the new services or not, people may stop short in an era in which a gallon of gas costs $4 or more.
The goal for providers isn't to offer new services. It's to make more money or, in a worst case scenario, maintain existing revenue streams. The dynamic going forward -- which will play out on an increasingly unpleasant landscape -- is not how cool the new services would be. It's whether people need -- really need -- them.