Home Broadband is a Market Like Any Other: Segments Exist

One would be hard pressed to name any market where there are not segments such as "value" and "premium;" "youth" versus "mature;" "urban" or "rural;" segments based on consumer values or interests or high-usage versus low-usage.

Many of those segments also exist in the home broadband market, which has at least a few key segments.

Some believe U.S. multi-person households (four people) might require symmetrical 2-Gbps internet access by perhaps 2030. Others believe capacity requirements will be less stringent, with download speeds possibly in the 1.4 Gbps range and upstream only at about 600 Mbps by 2030. 

Such forecasts for home broadband have key implications for capital investment and access strategy choices for suppliers of home broadband services, including architecture choices, the pace of platform upgrades and investment and choices about which customer segments to chase. 

As we are seeing with 5G fixed wireless, for example, networks operating far below what is possible on the most-advanced fixed networks are viable, since some customers will prefer services operating far below the headline speeds possible on all-fiber access networks of the fastest hybrid fiber coax networks, for example. 

That is especially true for single-person households. For telcos (mobile and fixed), cable TV companies and independent internet service providers, the overall principle might be to deploy “fiber to wherever you can make money.”

In other words, platform decisions are a complicated matter based on local competitive pressures capital requirements and expected customer demand. As mobile operators have demonstrated, fixed wireless offering maximum downstream speeds of 200 Mbps or less might appeal to perhaps 20 percent to a quarter of the market, and requires zero access fiber.

Cable operators have shown they can serve most of the home broadband market with hybrid fiber coax that keeps improving, but that a major platform shift is likely once mainstream customers start demanding upstream speeds closer to 0.5 Gbps up to 1 Gbps. 

Coverage and capex requirements, more than speed, are key considerations for most fixed network telcos and independent ISPs relying on fixed network platforms, given the capex requirements and payback models for new fiber-to-home deployments. 

source: Ookla 

But new cost-reducing improvements keep coming. For FTTH installations, for example, the ability to pull fiber directly to the in-home router eliminates the hardware cost and installation time required to activate a new account. 

Study Title	Authors	Year	Methodology	Findings
A Comparative Cost Analysis of Next-Generation PON Architectures for Residential Broadband Access	Hossain et al.	2020	Compared costs of traditional GPON with XG-PON and NG-PON2, including FTTR considerations	FTTR with XG-PON and NG-PON2 showed potential for lower deployment costs compared to traditional GPON with ONTs
FTTH Deployment Scenarios for MDUs: A Cost-Benefit Analysis	Kim et al.	2019	Compared costs and benefits of FTTH deployment options in multi-dwelling units (MDUs)	PON with integrated routers showed potential cost advantages over traditional ONT-based deployments in MDUs
The Economic Feasibility of Fiber-to-the-Premises Access Networks	Sorrentino et al.	2018	Analyzed economic factors impacting FTTH deployments	FTTR solutions and advancements in PON technology could contribute to reduced deployment costs for FTTH

Platform capabilities notwithstanding, home broadband markets likely will always have value and premium segments; high-use and low-use segments. There also will be differentiaion by supplier platforms as well. Satellite might never offer as much bandwidth as a fixed network, but has the advantage of ubiquitous access, which is why smartphone vendors are moving to add satellite access as an "emergency connectivity" feature. 

Fixed wireless might similarly fail to reach fixed network capacity, but also features a lower-cost, faster time to deploy platform that is "good enough" for a substantial portion of the market. 

And mobile phone access might be all some consumers really want to pay for. Headline capabilites do matter, as they increase over time. But not all consumers want to buy the headline service capabilities, and likely never will.