Consumers are rational about their internet access purchases. At any given point in time, most consumer customers buy service plans in the middle of the range (price and speed), instead of the fastest or slowest tiers of service. Of U.S. and Western European accounts tracked by OpenVault, for example, about four percent of consumers are power users.
Perhaps two percent to three percent of customers actually buy the gigabit speed tier. Globally, the 64 percent of customers buy service between 50 Mbps and 300 Mbps.
Marketing claims by service providers notwithstanding, that is a good pattern to remember. When Verizon launched its fiber-to-home FiOS service in 2005, top speeds were 30 Mbps. Earlier FTTH deployments had a top speed of 10 Mbps.
I recall saying, back then, that if I ever was able to buy the product, I would do so. Fast forward to 2016 or so, when I could buy gigabit per second service, but still have not done so.
So the clear question is “why” that has not happened, and the clear answer is that the apps I use do not actually require 1 Gbps, or even 500 Mbps. There is, in fact, no perceivable experience advantage to buying such services, at the moment. Beyond perhaps 25 Mbps to 50 Mbps per user, I am not convinced I could discern any advantage from higher speeds.
I am fairly convinced that no application I use actually benefits from speeds faster than 100 Mbps on my end of the access connection, whether I can experience the difference or not.
That could have implications for would-be challengers in the residential internet access business. As a practical matter, most of the addressable market--as much as 95 percent of all potential buyers--will actually buy service up to about 300 Mbps.
So most of the market can be contested when an internet service provider provides speeds up to perhaps 150 Mbps to 300 Mbps.
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