Hold onto your wallets! Verizon launches 500 Mbps FiOS tier for $310 a month

Updated throughout at 1PM to reflect new information from Verizon.
As gigabit networks get all the love, Verizon(s vz) has upped the ante on its own fiber to the home network, announcing a 500 Mbps (that’s half a gigabit) download tier with 100 Mbps upstream capacity. That’s blazing fast and will be available in far more markets than Google’s(s goog) gigabit network or the one-off municipal networks around the country.
However, Verizon is keeping things lucrative, planning on charging $309.99 per month for internet and TV or $329.99 per month for internet,TV and phone with a two-year agreement. Verizon will offer stand-alone service to residential customers for $299.99 per month and $294.99 with a 2-year contract. The 500 Mbps is only offered on a stand-alone basis for small businesses, and costs $369.99 per month with a two-year agreement. You don’t have to sign a contract but then Verizon will charge you a bit more.
Google Fiber signsThere are a few interesting things to note in this release worth noting for broadband lovers like myself. The first is that Verizon is charging a lot for this service when compared to Google’s $70 per month for gigabit service and $120 for gigabit service plus TV in Kansas City, and also more than the newer gigabit networks proposed in Vermont ($35 for a gigabit network) or Seattle ($80). However, when compared with the 300 Mbps offerings from cable providers (Comcast charges $300 a month) the current pricing looks reasonable– underscoring how broadband pricing is all about the competition in local markets.
The other interesting bits in this release is how Verizon is clearly driving customers to sign contracts, a phenomenon that has taken hold in the last few years further reducing a customer’s ability to switch providers and acting as a possible anti-competitive move. It’s a tactic Verizon has used well in the wireless market.
Verizon is pitching this tier as being about the internet of things, but let’s get real: unless you’re hooking up a bunch of Dropcams, the internet of things isn’t the broadband suck that video is. But Verizon is right when it comes to the realization that people are using more of the capacity on their connections — so while people may never use the entire 500 Mbps for one or two apps that require high speeds, many families are all wanting to use three or four apps or broadband-enabled services, which eats into the capacity. Thus, while many folks might focus on speed here, it’s better to start focusing on the high speed tiers as capacity upgrades. It’s like adding more lanes as you increase the speed limit.
I’ll applaud demand for faster services — Verizon notes that a third of its customers are already on its 50 Mbps or above tier — since people want more broadband capacity. However, this announcement also comes with a whole host of issues that paint a grim picture about our broadband market in the U.S.