Implications of Building All Networks as Video Networks
All consumer networks are becoming video delivery networks, even if other revenue-generating media types are supported. Among other implications, that development means revenue per bit and “cost per bit” are losing relevance, as the revenue per bit varies so wildly between application types, and because video produces the absolute least revenue per bit of any application, by orders of magnitude.
Just how wide the variance is depends on the assumptions, but video revenue per gigabyte can be four orders of magnitude less than that of voice or text messaging, for example.
That is one good reason why many observers believe the telecom business no longer can be built solely on connectivity revenues and services, but must expand to embrace revenue sources elsewhere in the value chain.
If networks now are dimensioned to support delivery of video entertainment, without regard to revenue directly generated by such applications, then revenues generated by capacity requirements alone becomes a difficult business proposition.
Consumers cannot afford to buy video levels of bandwidth on a metered basis, unless the costs are very very low, since video consumes so much bandwidth per minute of use, compared to any other media type. That makes pricing of internet access quite challenging, as incremental capacity supplied produces little incremental access revenue, comparatively.
So the need to build networks and add capacity for apps that produce little direct revenue is a huge change from the way investments once were made in incremental capacity.
In the past, service providers added capacity as revenue-producing demand increased. These days, capacity has to continually be increased, even if no direct incremental revenue is reaped.
No story is more consistent than the steady increase in bandwidth provided to consumers over fixed and mobile networks, satellites, undersea or Wi-Fi networks. Wi-Fi network maximum bandwidth has been doubling about every two to five years, since 1997, for example.
The other story is decreasing prices per supplied gigabyte of usage, and declining prices, when prices are adjusted for inflation or purchasing power over time.