This site is known for highlighting the continuing increase in retail broadband speeds offered by broadband carriers. From 1.5 Mbps to 5 Mbs to 20 Mbs, to talk of even 100 Mbps, carriers are increasingly trying to outdo each other with “my broadband is bigger than your broadband” bravado. Maybe they’re wasting their time (and money). New research from LRG reports that 70% of broadband customers are happy with their existing broadband package. Additionally, the research findings suggest that only 24% of existing broadband subscribers are “very interested” in receiving faster Internet access and only 11% “would very likely pay an additional $10 per month to double their Internet speed.” Ten dollars to double your speed – not a bad deal if you can get it. “While the base of high-speed Internet subscribers in the US has rapidly increased over the past few years, broadband subscribers typically remain very satisfied with their service and are not interested in paying for even faster Internet access,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc.
Are customers really demanding these higher speeds? If you listen to analysts (myself included at times), absolutely. But data like this does add a reality check to the nonstop rhetoric of “increase broadband speeds at all costs.” Consumers are the ultimate deciders of how much speed is enough. I haven’t seen a breakdown of broadband penetration by actual tiers from any of the major purveyors of faster broadband packages. We all know broadband penetration is growing, but do we really know if customers want/need 100 Mbs? More importantly, do we know how much consumers are willing to spend to get these faster speeds? Just guessing, but I don’t think an extra $10/month is enough to justify the investment in getting even 20 Mbps, much less 100 Mbps, to the home. What do you think?
The issue isn’t so much current throughput speed but rather making sure some minimum level of broadband — such as the California PUC’s defintion of 3mbs down and 1mbs up — is universally available.
Throughput demand will invariably increase over time, so infrastructure should be planned based on future and not current needs and allowing sufficient headroom to accommodate future requirements.
In light of carrier complaints of “bandwidth hogs”, it is interesting to note that many of the key benefits of Broadband connectivity enure from it “always on” characteristic (versus dial-up) and the ability to access relatively high data rate connectivity when needed – not average throughput per ce.
Even during peak useage times, a typical web surfer will average less than a few hundred kilobits of traffic, but the quality of the user’s experience is greatly diminished if the bits he needs are not provided at a high data rate (particularly for streaming content).
The last mile (or 1st mile) needs to be architected to permit the end user to “burst” content during periods of need and the absence of such capacity severly constrains the applications that can be provided.
How can users really say what hey would pay until the applications exist and are promoted that provide value?
I’m watching Wimbledon, live on msnbc.com right now. Eventually, live programming like this, or MLB games or NFL games, HBO, Comedy Central, will all be in 1080p streaming over the internet, to our computers, or iphones, or HDTV’s/xbox’s/ps3’s/netflix boxes. Everything will be OnDemand, or live HD video delivered over the internet. Imagine if/when apple opens up the apple tv for developers like they did the iphone. I’d pay to get NFL sunday ticket from itunes instead of DirecTV in a heartbeat if it’s on appleTV live! MLB is doing something similar for iphone already!
I love the idea of alternatives to the cable companies, or even verizon or directv! Companies like apple or netflix, or even microsofts xbox can and will provide that some day!
THEN we will need the bandwith. Now I see why cable/telco companies want to use a bandwith cap. Might be a good 5-10 years before we see this though.
Based upon current applications/uses, I wouldn't spend $10 to double my 1.5mg/sec dsl service, so I am not surprised by this report.
Nor would I pay current Qwest (or CableOne) prices to upgrade to video capable speeds to get streaming video of the content now provided by cable. I don't find that content worth even $10, but I realize the market clearly indicates that others do.
I think the current cable market has defined the ceiling that customers would pay for video, so unless broadband video is significantly less cost than current cable prices, I don't think it will find a very receptive market. I don't think HD and/or more choices or options will change consumer's perception of the value of video.
However, something new may provide sufficient incentive to get me to pay for higher speed. I follow technology issues pretty closely and have not heard of any upcoming applications that would cause me to change, but I can't predict the future.
I’ve heard Economic Developers state that the U.S. is losing jobs to Japan and South Korea because they have 100mps speeds. Or that our state is losing jobs to states where there is more broadband speed.
So the question is: Do companies REALLY need that much broadband speed? OR are their CEOs falling for the perception & hype mentioned in the story? …that more is better.
I work for a broadband provider. Many customers typically now have 1.5Mg/sec download speeds. When offered to double their speed to 3Mg/sec for $10, we have VERY few takers. The customers that are interested…are teenagers who want as much speed as possible for gaming. So is that a “want” or a “need”?
Perception is everything.
Tom hit is right, the real driver of increased demand for broadband is video. Not channels that s dominate the current product model, but streaming video the “point, click’ and watch” model. Things like Wimbledon, or the World Cup game I want to see, not the one ESPN chooses t show me. Two things have held this back until now. Copyright issues, which are rapidly being resolved, and which device you can watch which programming on. When I watch sports, I don’t really want it on my PC at my desk, I want it on the TV in the living room. Once that hurdle is cleared, demand of bandwidth will go up rapidly.
The big issue here that many people on the network provider side have missed is that quality video requires something resembling a sustained rate, not the burst rate we are used to for e-mail, file transfer, web search, or even slow streaming video such as You-Tube. Thus, the claims of 25, 50, 100 Mb speeds that are out there now, which are burst rates in most cases, will soon become meaningless. I can have a gazillion Mb nominal burst rate, but if I can’t sustain say 6-8 Mb for 1080, who cares? I will go where my video works, not who advertises the biggest number. Just something for the providers’ marketing whizzes to think about.
The network guys need to consider that it takes a much bigger pipe to serve 100 sustained 8 Mb channels for video than it does to give those same 100 users 100 Mb or more of burst rate.