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. 

AT&T Intros "Turbo" QoS Features for Mobile Customers

AT&T has introduced quality of service features for its 5G service, intended to offer a more-consistent access experience for gaming, social video broadcasting and live video conferencing, known as "AT&T Turbo."

But AT&T has not really said “how” it is providing what appears to be data prioritization, nor been specific about the degree of performance improvement. One would think the technique involves giving AT&T Turbo users a different “class of service” tags. 

Even before the advent of 5G network slicing, which enables the creation of virtual private networks, mobile and fixed network operators had a few techniques to create different classes of service. 

DiffServ (Differentiated Services) is a widely-used standard that classifies traffic into different categories based on a DSCP (Differentiated Services Code Point) value. The DSCP value is a code embedded in the IP packet header that identifies the traffic type (such as high-priority voice call, video streaming, web browsing). Routers within the network use this DSCP code to prioritize packets and allocate resources accordingly.

Operators also cna use QoS queuing to create separate queues for different traffic classes within routers. High-priority traffic gets placed in a higher priority queue, ensuring it gets processed first. This helps minimize latency for critical applications like online gaming or video conferencing.

ISPs also can set bandwidth limits for specific types of traffic or entire user accounts. This helps prevent network congestion and ensures fair allocation of bandwidth among users. For example, an ISP might throttle video streaming after a certain data usage threshold to avoid impacting other users' internet experience.

Traffic shaping can be used to define the rate and burstiness (peak data transfer) for different traffic types, which can help smooth out traffic flow and prevent congestion.

It is unclear which techniques AT&T might be using. 

Service providers have tended to provide such services for business customers, as network neutrality principles generally apply only to consumer services, whether fixed or mobile. Called  “AT&T Turbo”

But that is changing, as mobile service providers start to offer quality-of-service features for consumer mobile services, and as 5G network slicing becomes available . 

Provider	Service Name	Description
Verizon (US)	5G Ultra Wideband with Business Preferred Data	Offers prioritized data access for businesses during times of congestion.
T-Mobile (US)	5G Advanced Network Solutions	Suite of features including network slicing (dedicating network resources for specific uses) and private network solutions for businesses.
AT&T (US)	FirstNet with 5G	Priority access and dedicated network resources for first responders and public safety agencies.
Deutsche Telekom (Germany)	Magenta Enterprise 5G	Offers network slicing and guaranteed bitrates for businesses.
Vodafone (UK)	Vodafone Business - 5G Network Slicing	Provides dedicated network slices with guaranteed bandwidth and latency for businesses.
NTT Docomo (Japan)	docomo 5G SA with Network Slicing	Offers network slicing for various use cases, including low-latency and high-capacity applications.

In part, these are moves that begin to extend fixed network differentiated service tiers to mobile service. Though mobile data plans long have included variable data consumption plans that also offer product differentiation, the newer QoS plans increase ability to differentiate by quality of service, not simply speed or data usage. 

Even if there are other differentiation mechanisms (content bundling; prepaid; network coverage), mobile operators still have significant room to create distinctiveness using speed, data plans and latency-related features of their networks. 

Tiered data plans based on usage create distinct tiers of service for users who use differing amounts of mobile data.

Still, up to this point, mobile operators have tended not to differentiate on access speed, offering one “best effort” speed for all users. Only business users have had access to service plans that guarantee minimum abscess speeds. 

Likewise, only business service plans have offered prioritized data access during times of network congestion. 

The new shift to QoS features for consumers seems largely a result of network slicing features of 5G networks, which will enable minimum guaranteed latency performance.

But network slicing can, in principle, also support guaranteed minimum speeds as well, allowing the creation of consumer service plans that provide QoS features.

CIOs Believe AI Investments Won't Generate ROI for 2 to 3 Years

According to Lenovo's third annual study of global CIOs surveyed 750 leaders across 10 global markets, CIOs do not expect to see clear and positive return on investment from their artificial intelligence investments for two to three years. 

source: Lenovo 

We should not find this surprising. Consider the last generally-recognized general-purpose technology--the internet--and the lag in perceived benefits. 

Early internet technologies (1995, for example) were less mature and reliable compared to today, with slow connection speeds (dial-up internet was the consumer standard in 1995), limited functionality (the shift to multimedia web had just begun in 1995), while enterprises had to allay their  security concerns.

The internet disrupted traditional business models, so companies needed time to develop new strategies for marketing, sales, and customer service in the digital space. That took time.

Also, though it seems clear enough now, the potential applications of the internet for businesses weren't fully understood at first. Experimentation was required.

Additionally, assessing the return on investment for early internet initiatives was difficult, as firms lacked the analytics tools to quantify the impact of online marketing, e-commerce, or other internet-based activities.

Complicating matters was the widespread failure of many e-commerce startups in the dotcom bust around 2000. Since whole firms failed, benefits were zero or negative. 

Study	Publication Venue, Year	Key Findings
"Why E-Business Fails" by Andrew McAfee	Harvard Business Review, 2002	Analyzed early e-commerce ventures and found many failed to deliver on promises, highlighting the need for a strategic shift beyond simply setting up a website.
"The Productivity Paradox in Information Technology" by Erik Brynjolfsson and Lorin M. Hitt	Journal of Economic Perspectives, 1997	Examined the early years of IT adoption and the difficulty in measuring clear productivity gains initially, suggesting a time lag for realizing benefits.
"Diffusion of Internet Commerce: A Study of Knowledge Acquisition" by Sang-Pil Han, Young-Gul Kim, and Yoonkyung Kim	Journal of Electronic Commerce Research, 2003	Focused on small businesses and found that knowledge acquisition and overcoming technical challenges were crucial for successful internet adoption.
Diffusing the Dot-Com Revolution: The State of Business Transformation in the New Millennium"James C. Brancheau, Richard B. Clark, and Thomas G. Rowan	2001	This study found that many companies struggled to transform their businesses for the internet in the late 1990s, and the early benefits were primarily cost reductions rather than significant revenue growth
"Understanding Digital Marketing ROI: A Literature Review and Synthesis"Magali Ferro, Pauline Pinheiro, and David Thomas	2014	This review of research on digital marketing ROI (Return on Investment) highlights the challenges of measuring the impact of online marketing efforts, particularly in the early days when attribution models were less sophisticated.

That tends to be the case with most information technology innovations, other studies have found, looking at IT in general, e-commerce in specific or productivity. 

Study Title	Publication Venue	Date	Key Conclusions
The Elusive ROI of IT Investments	Strategic Management Journal	1997	Examined IT investments in large firms and found difficulty in directly measuring ROI (Return on Investment) due to factors like long-term strategic benefits and integration challenges.
From Bricks to Clicks: Does IT Pay Off?	Information Systems Research	2002	Analyzed data from over 200 firms and found a delayed effect of e-commerce initiatives on profitability. Early adopters often faced challenges like website development costs and changing consumer behavior.
The Productivity Paradox in Information Technology	The Review of Economic Studies	2003	Investigated the impact of IT on US productivity growth in the 1990s and found a "productivity paradox" where benefits weren't immediately apparent. The study suggests a "learning period" was needed for firms to leverage the internet effectively.
A Longitudinal Analysis of Web Site Traffic and Sales	Marketing Science	2004	Analyzed website traffic and sales data for multiple firms and found a positive correlation, but it took time for website traffic to translate into significant sales growth.
The Productivity Paradox in a Service Economy	Quarterly Journal of Economics	1998	Robert J. Gordon analyzed data from the US economy and found a productivity slowdown despite the rise of computers and the internet in the 1980s and 1990s. The study suggests a lag between technology adoption and measurable economic impact.
Diffusing the Dot-Com Revolution: An Organizational Perspective	Academy of Management Journal	2000	Andrew S. Melville, Thomas Durand, and Nina G. Guyader explored how established firms adopted e-commerce in the late 1990s. They found challenges in integrating new technologies with existing processes, leading to slow initial returns.
From Bricks to Clicks: Determinants of Success in Online Retailing	Journal of Retailing	2002	Kenneth C. Lichtenstein, James A. Lumpkin, and Elizabeth Van Wijnbergen analyzed early online retailers. They identified the need for significant investments in infrastructure and marketing before online channels became profitable.
Why E-Business Fails	Harvard Business Review	1999	Dorothy Leonard-Barton argued that many early e-commerce ventures failed due to a lack of strategic planning and a focus on technology alone, neglecting organizational change and customer experience.

The point is that, of course it will take some time for CIOs to demonstrate meaningful outcomes from applied AI. That is always the case when an important new technology--to say nothing of a general-purpose technology, is introduced. 

Whole business processes have to be redesigned, generally speaking, before the innovations can work their magic and produce measurable outcomes.

Lenovo CIO Study Finds a "To be Expected" Assessment of AI

According to Lenovo's third annual study of global CIOs surveyed 750 leaders across 10 global markets, CIOs do not expect to see clear and positive return on investment from their artificial intelligence investments for two to three years. 

source: Lenovo 

We should not find this surprising. Consider the last generally-recognized general-purpose technology--the internet--and the lag in perceived benefits. 

Early internet technologies (1995, for example) were less mature and reliable compared to today, with slow connection speeds (dial-up internet was the consumer standard in 1995), limited functionality (the shift to multimedia web had just begun in 1995), while enterprises had to allay their  security concerns.

The internet disrupted traditional business models, so companies needed time to develop new strategies for marketing, sales, and customer service in the digital space. That took time.

Also, though it seems clear enough now, the potential applications of the internet for businesses weren't fully understood at first. Experimentation was required.

Additionally, assessing the return on investment for early internet initiatives was difficult, as firms lacked the analytics tools to quantify the impact of online marketing, e-commerce, or other internet-based activities.

Complicating matters was the widespread failure of many e-commerce startups in the dotcom bust around 2000. Since whole firms failed, benefits were zero or negative. 

Study	Publication Venue, Year	Key Findings
"Why E-Business Fails" by Andrew McAfee	Harvard Business Review, 2002	Analyzed early e-commerce ventures and found many failed to deliver on promises, highlighting the need for a strategic shift beyond simply setting up a website.
"The Productivity Paradox in Information Technology" by Erik Brynjolfsson and Lorin M. Hitt	Journal of Economic Perspectives, 1997	Examined the early years of IT adoption and the difficulty in measuring clear productivity gains initially, suggesting a time lag for realizing benefits.
"Diffusion of Internet Commerce: A Study of Knowledge Acquisition" by Sang-Pil Han, Young-Gul Kim, and Yoonkyung Kim	Journal of Electronic Commerce Research, 2003	Focused on small businesses and found that knowledge acquisition and overcoming technical challenges were crucial for successful internet adoption.
Diffusing the Dot-Com Revolution: The State of Business Transformation in the New Millennium"James C. Brancheau, Richard B. Clark, and Thomas G. Rowan	2001	This study found that many companies struggled to transform their businesses for the internet in the late 1990s, and the early benefits were primarily cost reductions rather than significant revenue growth
"Understanding Digital Marketing ROI: A Literature Review and Synthesis"Magali Ferro, Pauline Pinheiro, and David Thomas	2014	This review of research on digital marketing ROI (Return on Investment) highlights the challenges of measuring the impact of online marketing efforts, particularly in the early days when attribution models were less sophisticated.

That tends to be the case with most information technology innovations, other studies have found, looking at IT in general, e-commerce in specific or productivity. 

Study Title	Publication Venue	Date	Key Conclusions
The Elusive ROI of IT Investments	Strategic Management Journal	1997	Examined IT investments in large firms and found difficulty in directly measuring ROI (Return on Investment) due to factors like long-term strategic benefits and integration challenges.
From Bricks to Clicks: Does IT Pay Off?	Information Systems Research	2002	Analyzed data from over 200 firms and found a delayed effect of e-commerce initiatives on profitability. Early adopters often faced challenges like website development costs and changing consumer behavior.
The Productivity Paradox in Information Technology	The Review of Economic Studies	2003	Investigated the impact of IT on US productivity growth in the 1990s and found a "productivity paradox" where benefits weren't immediately apparent. The study suggests a "learning period" was needed for firms to leverage the internet effectively.
A Longitudinal Analysis of Web Site Traffic and Sales	Marketing Science	2004	Analyzed website traffic and sales data for multiple firms and found a positive correlation, but it took time for website traffic to translate into significant sales growth.
The Productivity Paradox in a Service Economy	Quarterly Journal of Economics	1998	Robert J. Gordon analyzed data from the US economy and found a productivity slowdown despite the rise of computers and the internet in the 1980s and 1990s. The study suggests a lag between technology adoption and measurable economic impact.
Diffusing the Dot-Com Revolution: An Organizational Perspective	Academy of Management Journal	2000	Andrew S. Melville, Thomas Durand, and Nina G. Guyader explored how established firms adopted e-commerce in the late 1990s. They found challenges in integrating new technologies with existing processes, leading to slow initial returns.
From Bricks to Clicks: Determinants of Success in Online Retailing	Journal of Retailing	2002	Kenneth C. Lichtenstein, James A. Lumpkin, and Elizabeth Van Wijnbergen analyzed early online retailers. They identified the need for significant investments in infrastructure and marketing before online channels became profitable.
Why E-Business Fails	Harvard Business Review	1999	Dorothy Leonard-Barton argued that many early e-commerce ventures failed due to a lack of strategic planning and a focus on technology alone, neglecting organizational change and customer experience.

The point is that, of course it will take some time for CIOs to demonstrate meaningful outcomes from applied AI. That is always the case when an important new technology--to say nothing of a general-purpose technology, is introduced. 

Whole business processes have to be redesigned, generally speaking, before the innovations can work their magic and produce measurable outcomes.