Tuesday, December 18, 2012

As Much Bandwidth as You Need, Not "Want," is Key

In many cases, a fascination with broadband “speed,” however valuable, does not really measure total value as perceived by the user of the Internet access service. Mobile connections, for example, are slower than fixed connections. But mobility adds so much value that the slower speeds are outweighed by the virtue of “anywhere” access.

And it is hard to dismiss the value of low-speed text messaging or even dial-up access services in many parts of the developing world. Likewise, evaluating the importance or use of broadband is more complicated than simply measuring speed or even price per megabyte consumed.

These days, a majority of all broadband access now uses a mobile connection, and broadband increasingly is becoming something a “person” uses, not a “place.” And that’s important. One might argue that, despite the growing importance of video features and applications, much of the value of mobile broadband comes from use of lower-speed services and applications. 


Even though there is an order of magnitude, or perhaps even two orders of magnitude difference between Google Fiber, running at 1 Gbps, and a mobile broadband connection, the actual end user experience might be all that different.

In fact, mobile broadband seems to have surpassed fixed broadband in 2008. By the end of 2010, there were over twice as many mobile broadband as wireline broadband subscriptions, according to the Broadband Strategies handbook.

The point is that a narrow concentration on access speed probably does not capture the magnitude of value of such connections.

Wireless broadband is already more prevalent than wireline broadband, virtually everywhere. The number of wireless broadband subscriptions in Africa, for example, is more than four times that of wireline.

Europe’s wireless broadband penetration is nearly double the wireline penetration rate at 26 percent and 54 percent, respectively.

This suggests the potential for wireless broadband in areas where traditional wireline infrastructure may be absent, as well as in areas with substantial wireline build-out.


"Fiber to where you can make money" is one humorous way of analyzing how close to the home a fiber access network should be built. In a similar way, consumers will evaluate access speed in relationship to what it is they have to do, where they are, what apps and devices they are using, which networks they can use, and what use of those networks costs, incrementally. 



No comments:

Many Winners and Losers from Generative AI

Perhaps there is no contradiction between low historical total factor annual productivity gains and high expected generative artificial inte...