Consumer internet bandwidth speeds, consumption and retail prices illustrate one enduring issue for connectivity providers: where the voice business was usage based, the broadband access business is largely untethered from usage charging.
The revenue implications are key: where additional voice usage tended to generate additional revenue, that tends not to be the case for broadband services. As this data from Ofcom illustrates, usage and speeds keeps climbing, but revenue is flat.
The business model implications therefore are stark. Capital investments must be made without necessarily producing incremental revenue. To keep profit margins stable, other areas of the business must become less expensive, whether that is marketing, sales, operations fulfillment, customer support or customer premises equipment.
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