Comcast to set blazing Internet speeds, but is it a double-edged sword?

comcast_logo.gifComcast in 2008 will offer High Speed Internet with speeds as fast as 160 megabits per second, which is a massive increase from its current maximum of 16 mbps. This is in many ways in response to competition from local telco’s such as AT&T and Verizon that are provide high speed Internet access over fiber optic networks. Of course, neither AT&T’s U-verse nor Verizon’s Fios has announced such high speed Internet offerings yet, but they certainly can have the capability to do so (Note: Verizon provides fiber optic all the way to the home, called Fiber-To-The-Home or FTTH, but AT&T and cable companies don’t), and it is this potential threat that is driving cable companies such as Comcast to one-up local telcos.

According to Comcast, this will allow a customer to “download a two hour-plus movie in high-definition in three minutes and 56 seconds”. No pricing has been announced yet. It might cost a pretty penny initially, with prices likely to fall once competitors start offering comparable download speeds.

Providing higher Internet speeds should be a boon for Comcast’s Internet business because it will help attract and keep customers that use high bandwidth servies such as gaming, video & music streaming and downloading, and Peer-to-Peer (P2P) applications extensively. However, this is a double-edged sword: Higher Internet speeds will fuel online movie and TV program downloads and streaming to a customers set-top box or TV from the Internet in a flash. This would be a great opportunity for companies like Netflix, which recently announced a deal with LG Electronics to develop a set-top box that can download movies and TV programs from Netflix over the Internet, and Amazon, whose Unbox service already sells movies to be downloaded to a Tivo. Apple with AppleTV, Moxi, Sling Media and others are also in the same arena.

Offering blazing Internet speeds will be great for Comcast in the short term, and Comcast will expand its Video on Demand service to counter the threat from the likes of Netflix, Amazon UnBox, and AppleTV, but in the long term this could very well be a double-edged sword that promotes online movie downloads and dampen interest in Comcast’s own Video on Demand service.