One often hears it said that “broadband usage in 2020 rose 50 percent.” The implication is that Covid explains the change. Covid did cause a shift of consumption from office to home; from school to home; from downtown office cores to suburban homes. Home all day, gaming and video content consumption spiked.
The issue is what happens once people are able to work substantially “at the office” again. By definition, students in school and not at home will not be playing videogames. Workers at their offices will not be watching streaming video while at the office. Work and educational traffic will shift back to school and work sites.
Beyond some permanent changes in the balance of in-office and at-home or remote work environments, the longer-term consumer bandwidth consumption trends are mostly unchanged.
There was an immediate step change when workers and students were kept home. But the long-term growth rates seem to have settled back to where they were before the sudden step change.
That might come as a surprise, given the 25-percent to 40-percent boost in traffic caused by stay-at-home policies, in the spring of 2020, for example.
But analysts at TeleGeography have argued the temporary change in bandwidth demand caused by stay-at-home policies will not persist. Usage levels will return to prior pre-pandemic patterns.
Many argue that “Covid caused a year’s worth of change in a month.” But that is not the same as arguing that the rate of change is permanently altered.
The point is that consumer data consumption routinely grows 25 percent to 50 percent per year, driven by streaming video consumption. For more than a decade, entertainment video has been the key driver of consumer bandwidth demand. In 2008, for example, video represented 99 percent of data consumption by consumers.
Today, content consumption still is the main driver of consumer bandwidth consumption. Consider that the “average” household now subscribes to four different video streaming services. Video is far and away the most bandwidth-intensive application, so the shift to video streaming (in advance of potential widespread use of virtual or augmented reality for gaming) determines consumer bandwidth demand.
To be sure, consumers are connecting more devices to the internet, adding to bandwidth demands. Still, video consumption continues to drive bandwidth demand. Also, the number of users in each household also matters. But household size--on average--does not change much, year over year.
The reason video drives bandwidth is simply that it is the most bandwidth-intensive application. By some estimates, where voice might earn 35 cents per megabyte, connectivity providers might earn a fraction of a cent per megabyte for all other internet apps and streaming, based on the purchase of the internet access service.
The exception is that connectivity providers who own a streaming service can monetize subscription or advertising revenue. But most internet service providers earn money only on the access subscription fees. As usage climbs while subscription fees remain relatively constant, revenue per bit falls.
The point is that Covid-induced changes in bandwidth consumption are likely transitory, beyond a step change in consumption caused by “stay at home” policies.
As people go back to school and back to the office, reversion to mean should occur. More traffic from school and office sites will occur, with less consumption during school and working hours at home locations.
Yes, bandwidth consumption will keep rising, and likely at rates we have seen over the past two decades. Covid distortions will be transitory, temporary and ultimately represent “noise” in consumption curves, not a change of the curves.
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