Marketing, Not End User Demand, Drives Gigabit Internet Access

Competitive dynamics, and not actual end user demand, frequently drive investment and marketing decisions in the telecom business. The gigabit Internet access trend provides an example.

Gary Bolton, Adtran VP says that two years ago, service providers told him that the biggest reason for deploying gigabit service was to satisfy future customer demand.

That's still a big reason today, but now the threat of competition is an even bigger one, with close to 70 percent of respondents surveyed by Adtran indicating competition is a top reason for deploying gigabit services, up from fewer than 50 percent in 2014.

In other words, gigabit Internet access is necessary for competitive reasons--to match other market offers--instead of being driven by actual end user demand.

You might argue that Google Fiber was the immediate catalyst for a change in marketing context in the U.S. market. But it now is Comcast, rolling out gigabit services to all of its consumer locations, that is the biggest competitive driver, given that Comcast is the biggest supplier of Internet access in the United States.

We sometimes also forget that among the other changes, the new gigabit push shows the importance of “non-traditional” or new platforms. Comcast, of course, bases its attack on hybrid fiber coax, a different platform from that used by telcos globally.

And other options are coming.

Starry is but one of the service providers attempting to prove that modern, fixed wireless networks are a better way to deliver gigabit Internet access to consumers and businesses, without necessarily building fiber to home networks.

Both Facebook and Google are developing or investigation use of platforms based on use of fixed wireless. AT&T has told the U.S. Federal Communications Commission that it is going to deploy many millions of fixed wireless access paths, while Verizon also has said it is looking at fixed wireless, especially as a result of its early 5G network deployment.

That said, there still are many--mostly smaller--service providers basing their gigabit networks on fiber. Cable TV hybrid fiber coax networks soon will be the main U.S. suppliers of gigabit services.