Supply can drive demand, if prices for a desired product are low enough. Rethink Technology Research, for example, estimates 40 percent of consumers are willing to pay a price differential up to US$20 for a gigabit internet access connection, growing to 65 percent of consumers as gigabit becomes a ubiquitous offer.
“We expect Asia to reach 233 million 1-Gbps lines, Europe 59.6 million, the US 37.7 million and Latin America just 10.7 million,” says Rethink Technology Research. “China alone is expected to have 193.5 million.”
Where take rates for gigabit connections in most countries remain in the “three percent to four percent of homes” range, gigabit adoption rates in most countries will grow to to well above 30 percent on average, and in countries such as France, Switzerland and South Korea, more than 50 percent of households will buy gigabit broadband services by 2023, Rethink predicts.
China will improve gigabit subscription rates from four percent of its 456 million households to close to 42 percent, Rethink predicts.
Price matters, though. The general trend is for access speeds to be increased while price remains constant. So the issue is how many consumers will be content with gradually faster speeds for the same price, versus upgrades to the faster speed available.
Service provider strategy also matters. Some ISPs might try selling one speed only (gigabit). Others will prefer a multiple speed tiers strategy. Historically, that strategy has had most consumers opting for the mid-tier offers, rather than the fastest or budget speed tiers.
As speeds climb, and unless new “bandwidth hog” applications become popular (beyond entertainment video), value will remain with the budget and standard tiers of service, one might argue.
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