Customers Buy What They Want, When They Want It

Some “debates” never seem to go away. Some decades ago, an engineering vice president quipped that “fiber is the future,”  followed after a short pause by “and always will be.” 

The humorous point was that customers make concrete choices under concrete circumstances that often defy our notions of “what is better” or “what they should buy.” 

The success of 5G fixed wireless and cable hybrid fiber coax alternatives to digital subscriber line probably comes as no surprise to anybody. But the actual choices consumers make, when fiber to home, hybrid fiber coax and other alternatives are available might confound technologists who believe “fiber is always the answer.”

In fact, consumers make choices that suggest that is not automatically true. Most telcos (perhaps all) have found that after marketing for several years against hybrid fiber coax, they tend to get about 40 percent adoption (four homes out of 10 will buy). 

So something other than “performance” is at work.  Rather obviously, a substantial number of customers believe the product version that makes most sense is a “good enough” product for a “reasonable price” For perhaps half the market, that means whatever commercial service offering speeds “in the middle” and also “prices in the middle” of all offers, low to high. 

Data from OpenVault consistently suggests this is the case. 

source: OpenVault 

Physical media matters, since not every platform has the ability to keep scaling bandwidth into scores-of--gigabit-per-second ranges, either symmetrical or not. 

But consumer demand also matters, as even when the difference between the fastest tier and the slowest tier is two orders of magnitude, most customers will likely keep buying speeds in the middle, about one order of magnitude below the “fastest” tier of service, and one order of magnitude above the lowest tier of service. 

Internet service providers often need to offer speed that is “good enough,” at prices that also are viewed as reasonable, to remain viable for half the market. But it might always be the case that up to 25 percent of the market will buy even a “slower speed” service if the pricing is right.

Even as speed requirements continue to grow, demand for “slower but affordable” and
“Good enough at a reasonable price” should both remain viable segments of the home broadband market.