Home Broadband Improvements Now Come at Twice Moore's Law Rates

In one sense, we should not be so worried that internet access providers will be able to keep increasing capacity to match end user demand. Consider the rates of improvement for computing and storage, using Moore’s Law, rates of improvement for fixed network internet access and mobile internet access. 

The computing baseline would be a doubling of capability every two years. Using that standard, communication networks lagged Moore’s Law rates of improvement in the 1980s. Fixed networks reached parity in the decade of the 2000s, while mobile networks reached parity in the 2020s. 

Decade	Moore's Law (doubling time)	Home Broadband Speed (doubling time)	Mobile Internet Speed (doubling time)
1980s	2 years	4 years	10 years
1990s	2 years	3 years	6 years
2000s	2 years	2 years	4 years
2010s	2 years	1.5 years	3 years
2020s	2 years	1 year	2 years

In fact, the rate of fixed network capacity increases now exceeds that of Moore’s Law. In other words, fixed network capacities are  improving twice as fast as computing capabilities. And while mobile networks have generally been more bandwidth challenged than the fixed networks, mobile capacity gains now equal Moore’s Law rates of improvement. 

Over time, that results in exponential rates of change. Home broadband speeds, in fact, do correspond with Edholn's Law or Nielsen's Law\ of bandwidth increase. 

Edholm’s Law states that internet access bandwidth at the top end increases at about the same rate as Moore’s Law suggests computing power will increase. Nielsen's Law essentially is the same as Edholm’s Law, predicting an increase in the headline speed of about 50 percent per year. 

Nielsen's Law, like Edholm’s Law, suggests a headline speed of 10 Gbps will be commercially available by about 2025, so the commercial offering of 2-Gbps and 5-Gbps is right on the path to 10 Gbps. 

source: NCTA  

To be sure, some access providers worry about capital investment costs. But, historically, internet service provider revenues and higher speeds have moved largely in tandem, even if cost per bit metrics show a steady trend towards lower per-unit cost. 

The overall trend for internet access is higher consumption at lower unit costs. In other words, we use more data, consumed at higher speeds, but also at more-affordable costs over time, adjusting for inflation and hedonic improvements. 

It is hard to answer the question “have home broadband prices risen since 2009?” without using hedonic adjustment and also adjusting for inflation. The Bureau of Labor Statistics uses hedonic adjustment to track producer prices for home broadband, for example, since speed and other attributes change over time. 

The rationale is that a dial-up internet connection is not a  comparable service to home broadband at various speeds (10 Mbps, 100 Mbps, 1 Gbps, for example). Since prices tend to stay about the same over time while speeds have increased for the “most bought” tiers of service, BLS adjusts prices to account for quality improvements. 

source: Bureau of Labor Statistics 

The bottom line is that ISPs do not seem to be faced with business scenarios where consumer demand cannot be supplied.