Is fixed network broadband access a discrete product, or a series of discrete products? The answer matters, as we can assume any product, including broadband access, will have a product life cycle. But we have to agree on what “the product” is, before we can figure out how to understand the life cycle.
Some might argue that “Internet access” is the product, with successive new generations of products simply reflecting better ways of supplying “Internet access.” That view would make dial-up, slower speed DSL or cable modem services and now 300 Mbps services products in one category. In that case, all fixed network Internet access, at any speed, is one product, with one life cycle.
Others might argue that the “product” actually is the various generations of service, and that each might have its own life cycle. In that case, we should expect to see successive and repeated shorter product life cycles.
The precedent, one might argue, is “voice service.” Over time, the industry has evolved through various types of switching and access technology, but the product category always has been “fixed network voice.” In a business sense, we can count the number of subscribers served by specific switch technologies, but the business-relevant distinction has remained “total number of lines in service” (access lines in service).
Using that analogy, all forms of Internet access represent one product category.
If “Internet access” is the product, then the rise and fall of dial-up access only represents a shift of demand to “faster” versions of the product, as consumers buy faster versions of cable modem, satellite broadband or telco high-speed access over time.
If “dial-up Internet access” is the actual product, then we already have seen a complete life cycle, from early adoption to maturity to decline.
But that isn’t the biggest potential issue. In many developed markets, the “Internet access” product is reaching saturation, where every consumer who wants the product already is buying it. To refresh product lines, and earn more revenue, service providers are relying on faster speed services that sell for higher prices.
But that only drives higher average revenue per user, not the total number of users. And that might suggest saturation of a single fixed network “Internet access” product.
That further might suggest a time is coming when demand not only stops growing, but could even decline.
That is a shocking thought, but note what is happening even in the younger Chinese market for Internet access.
China has seen fewer fixed broadband subscribers over the past year, instead of growing. In other words, fixed broadband accounts actually declined, as users apparently decided to spend their money on mobile broadband, rather than fixed broadband.
Internet users reached 530 million over the past six months, but its broadband subscriber base actually shrank as mobile became the most popular way for users to get online for the first time, a report by the Chinese government suggests.
Of those users, some 380 million were fixed broadband users, down from 396 million in December 2011, and 388 million were mobile internet users, up from 356 million.
One hypothesis is that “mobile broadband access” is a substitute and new product, with a different life cycle.
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