Supply is different from demand. Though perhaps obvious, it is an often-confused principle when looking at the ways people buy and use internet access services. This illustration of actual fixed network internet access take rates in the United Kingdom, sorted by speed tiers, provides an example of the demand picture.
In every market, it seems, the percentage of customers who buy the fastest tier of service--typically the most expensive as well--is a small percentage of total buyers. In the U.K. market, about eight percent of buyers choose the fastest tier of service, perhaps 14 percent buying the fastest tiers.
Still, 42 percent buy the slowest tiers of service, with 21 percent paying for 10 Mbps or slower service, while another 21 percent buy speeds between 10 Mbps and 20 Mbps.
In the U.S. market, those 42 percent of customers, though buying internet access service, are not buying “broadband” service, defined as a minimum of 25 Mbps. About 44 percent of U.K. customers buy services with speeds ranging from 20 Mbps up to 100 Mbps.
The point is that, to the extent speed and price are directly related, customers generally do not buy the most-expensive product, but instead other products are are deemed good enough (enough value for the price).
Increasingly supply of the most-expensive product does not necessarily translate into an equivalent amount of buying, especially as speeds tend to increase over time, while price declines or remains the same.
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