Incumbent internet service providers claim they need financial support from a few major hyperscale app providers as they arguably cannot sustain their home broadband networks without such support.
Governments, on the other hand, have pursued all sorts of policies to ensure that home broadband service is affordable for citizens, resulting in “low prices” for home broadband, in many countries. But low prices are a disincentive for investment, and governments want that as well.
So some of those governments now seem receptive to the idea that perhaps they have pushed for “low prices” at the expense of sustainability of their ISP supplier bases and incentives for investment.
Which is a bit of a seemingly-enduring paradox. To a large extent, incentives for investment, which require relatively higher prices, but lead to faster speeds, clash with the desire for low retail costs, which are a clear disincentive to invest and tend to result in lower speeds.
But even a shift to “all fiber” access does not necessarily solve the “low price, high speed” dichotomy, though that can be the case.
Even where fiber-to-home networks are widespread, and considered the “best” home broadband platform, they sometimes face facilities-based competition from hybrid fiber coax networks, for example.
In many such cases, only 40 percent to perhaps 50 percent of customers buy those services from the FTTH provider. In markets where there is no significant facilities-based competition, and there are “best, better, good” service plans, we see the same pattern.
As with any other consumer product, not every customer buys the “premium” product version. So is “fiber always the answer?” Yes, in a long-term sense, for fixed networks, as a physical media choice.
But even when a single FTTH wholesale network operates, customers still seem to choose “good enough” service plans, not the “best” and not the “value” tier, either.
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