Showing posts sorted by date for query average home broadband cost. Sort by relevance Show all posts
Showing posts sorted by date for query average home broadband cost. Sort by relevance Show all posts

Monday, April 20, 2026

Debating Amazon Leo Objectives

Amazon’s objectives with Leo are debated. 


Is this a standalone telecom business or a strategic infrastructure layer feeding higher-margin businesses (likely AWS)?


The possible motives are complicated as Amazon often talks like a “margin hunter,”  but often acts like a scale builder that tolerates thin margins for a time. 


The trick is that Amazon usually tries to separate where value is created from where it is captured. 

Amazon repeatedly enters markets characterized by low margin and high margin, so “margin” is not the primary consideration.


The effort to find “moats” or bottlenecks where value is extracted, and sometimes a low-margin business can lead to a high-margin moat. 


Layer

Characteristic

Amazon Behavior

Customer-facing layer

Huge TAM, fragmented, price-sensitive

Compete aggressively, often low margin

Infrastructure / platform layer

High fixed cost, scalable, defensible

Invest heavily, aim for high margin long term

Data / control layer

Feedback loops, optimization

Build moats that others can’t replicate


The point is that Amazon doesn’t mind entering a low-margin market if it helps it own a high-margin layer underneath or adjacent to it.


Also, “high capital investment” can be a feature, not a bug:

  • High CapEx deters competitors

  • Once built, marginal costs drop sharply

  • Scale converts fixed costs into a profit flywheel

  • Infrastructure can support multiple businesses

  • Pricing power eventually comes, once dominance is achieved.


So huge capex commitments are consistent with Amazon’s playbook, if Amazon believes it can control a bottleneck layer.


“Is this a high-margin or low-margin business?” might not be the right question for Amazon leaders, who likely are asking:

  • Can we own a critical layer?

  • Does this scale globally?

  • Does it reinforce our existing flywheels?

  • Can we improve cost structure vs incumbents?

  • Is there a hidden high-margin component?


So the larger picture is often not the immediate or obvious business, but the ability to create leverage elsewhere. Consumer initiatives such as e-commerce; devices or streaming then can be viewed as demand aggregators and ecosystem lock-in creators that drive revenue indirectly (advertising, cross selling, subscriber lock in).


Enterprise infrastructure plays such as AWS or logistics might be better examples of direct, high margin initiatives.


The thing about Leo is where it fits. From one point of view, consumer telecom is a low-margin, highly-competitive business with high regulatory conditions, low innovation and low growth rates. 


So why even consider it?


Amazon probably envisions non-obvious leverage points:

  • Where Amazon captures high-margin compute, not connectivity

  • With different value drivers in consumer and business markets.


Owning a connectivity service could:

  • Reduce internal costs

  • Improve performance (latency, reliability)

  • Be bundled with Prime and devices to

  • Drive usage of AWS, the advertising platform and e-commerce

  • Support IoT connectivity (devices, logistics, smart home). 


Framed that way, Leo might be viewed as a platform layer supporting:

  • Edge cloud

  • AWS (compute plus connectivity)

  • Telcos as customers

  • Prime average revenue per user or account

  • Customer retention and acquisition


To be sure, execution will matter. But, in theory, Leo is not directly about high margin. It is about control of what is likely to be a low-margin feature of a higher-margin ecosystem. 


Amazon’s explicit framing is straightforward:

  • Create a global broadband access business

  • Serving “tens of millions of customers” globally

  • in “unserved and underserved” markets

  • Offers private connectivity directly into AWS

  • for enterprise, government, and telecom customers.


So AWS integration, enterprise and government use cases and private networks might be key, not “consumer telecom.”


Leo then is a connectivity extension of AWS. 


But there are clear risks and some skeptics. 


Optimistically, Leo extends AWS to the edge of the network. 


On the other hand, it is a near-term drag on earnings, in a business with tough economics and financial returns that could take some time to develop.


So it might matter hugely whether Leo can generate AWS pull-through; enterprise demand and other ecosystem upsides. 


Also, how long this takes could matter. 


Layer

Role

Margin Potential

Consumer broadband (Leo ISP)

Distribution / scale

Low

Enterprise connectivity

Premium services

Medium

AWS integration layer

Data + compute + control

High

Ecosystem effects (Prime, commerce, ads)

Indirect monetization

Very high


Sure, it’s risky. But some will point to past Amazon initiatives based on entry into low-margin businesses that provided moats:

  • Retail → low margin → enabled AWS scale

  • Devices → low margin → enabled ecosystem lock-in

  • Logistics → low margin → enabled marketplace dominance.


Leo arguably fits the pattern, optimists will argue. It’s about high-margin AWS, not low-margin telecom. Skeptics will worry about the execution risk. 


Monday, January 26, 2026

Mission Creep: When a Problem is Solved, Go Do Something Else

One issue in public life is mission creep, the gradual and often unintended expansion of an entity’s goals, operations, scope or activities beyond the original core mission. It is a big issue for non-profits, but sometimes for logical reasons. 


When an issue is essentially “solved,” a non-profit can disband, as it has succeeded, or institutional vested interests can find a new problem to solve. In other cases, growth itself seems to become its own driver, as the logic seems to be, “if we are doing good things now, how much more impact could we have if we were bigger?”


The new goals may serve the interest of the employees or the management of the organization, who would otherwise be “out of their jobs.”


In cases where the organization’s original goals are already achieved or when the original goals are no longer necessary, goal displacement means organizations direct their energies elsewhere. 


For example an organization which was initially intended to fight polio would find a new disease to fight once the vaccine for polio is invented.


There are other implications for donors and citizens who are not inside an organization, though. There are lots of problems we need, or should work to fix. So spending resources on problems that are already largely “fixed” is wasteful. 


Spending “too much” on problems with less social or economic impact likewise is wasteful; as would be the case of directing excessive effort and resources on one problem, no matter how important, to the exclusion of many other equally-pressing issues. 


For example, some might argue we need to devote serious resources and effort to global warming, even if that means other things (eradicating malaria, improving general health, sanitation or water quality, building more housing, eliminating infant mortality) take a back seat. 


It might seem obvious this is not a good idea. 


We might see some relevance, in that regard, around the “problem” of quality internet access


There was a time when “quality” internet access (based on downstream speed) was a bigger problem in the U.S. market. That is not to say there are no issues, but useful internet access does not seem to be much of a problem for most potential users. 


And though we often focus on “supply” issues, “demand” also matters, as some customers choose not to buy fixed network internet access, while others use substitutes. And since price and speed are correlated, customers make decisions all the time about the tradeoff between price paid and typical speed received. 


Making quality internet access available is one problem. Choices consumers make is a separate issue. 


To the extent there are problems, those tend to deal with supply: is quality access available? What consumers choose to buy is not the same “problem,” indeed is simply consumer choice. 


We sometimes see data that suggests customers who buy very-low-speed services are a “problem.” Maybe, maybe not. It’s a problem if the option of buying higher speed services is unavailable. It is not a problem if a consumer makes a rational buying decision. 


Purchased plan tier (down/up)

Approx. share of U.S. broadband households

Rationale snapshot

≤25 Mbps (legacy DSL / low‑end cable)

~10–15%

FCC still tracks a small tail of low‑speed subscriptions; availability of ≥25/3 to ~98% of population suggests remaining low tiers are now a minority.itif+1

25–99 Mbps

~20–25%

Many cable and FWA “basic” plans fall here; must be below the 53% that are ≥100/20, leaving roughly a quarter of subs in sub‑100 tiers.benton+1

100–499 Mbps

~30–35%

Parks Associates reports that 100–999 Mbps is the most common tier; combining that with 53% at ≥100/20 implies a large cluster in low‑hundreds plans.benton+1

500–900 Mbps

~15–20%

Higher cable/fiber tiers in competitive markets; fills the gap between the big ≥100/20 cohort and the 26% at ~940/500.benton+1

≈940–1000 Mbps (gigabit class)

~20–30%

FCC data indicate ~26% of households subscribe at 940/500 Mbps when available, which is a reasonable center estimate for this tier’s share overall.benton


One sees this when looking at speed tiers purchased and other variables such as household income, age, educational status or geography. One might argue that supply is a bigger problem in rural areas, but not much of a problem in urban areas. 


Many observers note that incomes tend to be lower in rural areas, which can affect demand. The cost of networks in rural areas also is higher, which affects supply. 


Segment

Indicative dominant tiers (down)

Implied avg purchased Mbps per household

Implied per‑capita purchased Mbps (household Mbps ÷ 2.5)

Key drivers

Urban

Mix skewed to 300–1000 Mbps, with high gigabit availability (82% access to gigabit‑capable).opensignal

~400 Mbps

~160 Mbps/person

High availability of 100/20 and gigabit, higher income, more competition; urban speeds about 40–45% higher than rural on average.rcrwireless+2

Rural

Mix skewed to 50–300 Mbps, with less gigabit (46% access), more sub‑100 Mbps and FWA.tlp+1

~200 Mbps

~80 Mbps/person

Only 72% of rural Americans have access to 100/20; lower gigabit availability and lower observed speeds; fewer providers in many counties.tlp+2


And household income is a major driver of buyer behavior. Wealthier households tend to buy more-capable speed tiers, just as they tend to buy more and “better” goods in general. 


Approx. income band (U.S. 2024)

Rough income deciles

Likely dominant plan tier (down)

Approx. avg purchased Mbps per household

Estimated per‑capita purchased Mbps

<$35k

Bottom 2–3 deciles

25–100 Mbps (many at 50–100 Mbps; some with no fixed broadband, relying on mobile).tlp+1

~150 Mbps (conditional on having fixed broadband)

~60 Mbps/person

$35k–$55k

Deciles 3–4

100–300 Mbps

~250 Mbps

~100 Mbps/person

$55k–$85k

Deciles 5–6 (around median $84k)census

200–500 Mbps

~350 Mbps

~140 Mbps/person

$85k–$130k

Deciles 7–8

300–1000 Mbps (heavy 500–1000 Mbps share)

~500 Mbps

~200 Mbps/person

>$130k

Top 1–2 deciles

500–1000+ Mbps (gigabit default where available)

~600 Mbps

~240 Mbps/person


The other notable demand issue is that a growing percentage of customers seem to buy mobile services as a product substitute for fixed network broadband. That might be especially true of lower-income households and households of younger people. 


In other niche cases, such choices might also happen for single-user households or homes in rual areas where there are fixed network supply issues. 


Customer segment

Typical characteristics and use

Likelihood that mobile‑only is satisfactory

Why mobile‑only can work reasonably well

Low‑income, light‑use households

Limited budget; 1–2 smartphones; little or no PC; usage focused on messaging, social, short video.playablemaker+1

Medium–High

Mobile data plans and smartphones cover core communication and entertainment needs at lowest total cost.playablemaker+1

Young adults (18–29), renters

High smartphone dependence; heavy social and app use; often stream video primarily on phones; more mobile than fixed in living situations.playablemaker+2

High for individuals, Medium for shared households

5G speeds and phone‑centric lifestyles make mobile‑only viable for day‑to‑day use, especially when not sharing with many others.datareportal+1

Students in K‑12 or college

Need stable connectivity for assignments, research, video classes, uploads.weforum

Low–Medium

In limited cases, a robust unlimited plan plus hotspot can bridge a temporary gap.datareportal+1

Remote‑work professionals

Need sustained bandwidth for video calls, large file transfers, VPN, and multi‑device use.weforum

Low

5G can sometimes support remote work on the move, and as a backup, mobile‑only can be a useful failover.datareportal+1

Rural households with limited fixed options

May have only expensive satellite or slow DSL; good 4G/5G may be the best available option.weforum+1

Medium

Mobile broadband can outperform legacy DSL or expensive satellite, especially where modern macro sites or fixed‑wireless offerings exist.datareportal+1

High‑income, tech‑heavy households

Multiple devices, 4K streaming, gaming, smart‑home gear; often already subscribe to high‑speed fixed broadband.weforum

Very Low

Mobile is excellent as a secondary/backup or for travel; speeds can rival entry‑level fixed plans.datareportal+1


The broader point is that internet access, generally speaking, is a problem that is mostly “solved” for most potential users and buyers, though some issues remain. 


As with always, the amount of effort or priority we “should” be devoting to such issues should be proportional to “where” and “why” the problems may continue to exist, tailoring solutions in ways that solve the problems in an efficient way. 


Once supply issues are overcome, we might not want to exert prior levels of effort to take on new missions such as “encouraging” use of the internet, which might not be a substantial problem, or one that really needs much subsidy and effort.


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