Friday, June 19, 2015

Does Anybody "Need" a Gigabit? Now?

Do U.S. consumers really “need” gigabit Internet access? Not really. But that doesn’t matter. Speeds continue to be pushed higher, as “gigabit” now is a marketing reality, if not an adoption certainty, yet. Where consumers have a choice of buying gigabit and lower speed services, ranging from 40 Mbps to 300 Mbps, many choose to do so.

By 2020, perhaps 60 percent of U.S. households will be able to buy high speed access at a minimum of 100 Mbps, for example. The issue is whether many leading ISPs will simply build to the gigabit standard, or whether some other intermediate step (100 Mbps or 300 Mbps) will be taken, prior to upgrading to a full gigabit.

Again, the issue is not “consumer need,” but “marketing push.” Google Fiber has succeeded in changing market expectations.

Perhaps shockingly, U.S. residential high speed access rates have increased about as fast as Moore’s Law would predict, as crazy as that seems for a “construction dependent” business such as fixed network access.

That is why forecasts of gigabit service, on a widespread basis, by about 2020 are based on historical precedent, not simply immediate trends. To be sure, “availability” and “purchase” are different matters. Networks might make gigabit speeds available, but that does not automatically mean consumers will buy service at such speeds.

The value-price relationship will matter. Where 100 Mbps or 300 Mbps is available at a perceived better value-price relationship, consumers will buy those services, even when it is possible to buy a gigabit service.

source: Technology Futures

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