Verizon's plan to offer supersonic internet

May 31, 2012: 6:11 AM ET

Its new service is fast enough to download a movie in less than a minute. But don't look for others to follow suit. It's just too expensive for telecoms to offer similar service.

FORTUNE -- Verizon has announced that it will soon make super-high-speed Internet service available to its FiOS customers. But don't go thinking this is the beginning of an American broadband renaissance. Verizon stopped building out its FiOS networks a couple of years ago, and the new service is likely to be incredibly expensive.

We don't know how expensive yet because Verizon (VZ) hasn't announced pricing (it says it will do so next month). The top available speed will be 300 megabits per second for downloads, and 65 Mbps for uploads. The download speed is double what FiOS customers can get now -- 150-Mbps downloads for $200 a month. Verizon is also introducing a middle-tier speed of 75 Mbps for downloads. It is getting rid of its 35 Mbps and 25 Mbps offerings.

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Most FiOS customers get the lowest tier, 15 Mbps for $54.99. The 300 Mbps service is for locations where there will be five or more people streaming video or gaming, Verizon says. At that speed, a two-hour, standard definition movie can be downloaded in about 40 seconds.

GigaOM describes the new offering as a "slam against cable companies trying to compete with Big Red [Verizon]." But Verizon is competing against cable companies only in the areas served by FiOS, and there aren't all that many of them. FiOS is available to 13.7 million customers, mainly in the Northeast and Mid-Atlantic states, but also scattered over other areas of the country.  A Verizon spokeswoman says there are about 5 million actual FiOS customers. Comcast (CMCSA), meanwhile, reported in 2010 that it had 16.7 million customers -- several million more than the number of customers to whom FiOS is even available.

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Verizon confirmed in March that it had no plans to expand FiOS service, which after all is an incredibly expensive undertaking. Instead, the company is concentrating on its mobile data services. It's possible that if demand for Internet-delivered movies and games grows enough, both telecom and cable companies will start investing in high-speed networks again. But don't expect it anytime soon.

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