Can ISPs Keep Increasing Internet Access Speed at Moore's Law Rates?

Perhaps improbably, at least some internet service providers--Comcast in particular--have been doubling the top speeds on their networks at rates consistent with Moore’s Law . “Comcast has increased speeds 17 times in 17 years and has doubled the capacity of its broadband network every 18 to 24 months,” Comcast says.

Comcast says gigabit speeds now are available to nearly all of the company’s 58 million homes and businesses passed in 39 states and the District of Columbia.

Of course, not every platform, or every ISP, has been able or willing to boost average speeds that much. The general rule is that a hybrid fiber coax network mostly can boost speeds by swapping out customer premises equipment, where a telco has to replace copper access networks with optical fiber. The former simply costs less than the latter.

source: youreeeka.com

That explains why cable TV operators tend to supply a disproportionate share of the fastest connections in the United States and United Kingdom, for example.

source: FCC

If  want to know why mobile service providers see upside in 5G , the ability to upgrade speeds to gigabit ranges without having to rip up copper access networks explains much of the interest.

Some have argued that fixed and mobile 5G is an existential threat to cable operators for that reason. Some us might argue that danger likely is overblown, but other existential problems arguably exist, among them declining revenue growth rates, profit pressures, lower average revenue per account and shrinking of revenue for virtually every legacy revenue stream.

Mobile substitution for fixed network voice services is one problem. But mobile messaging and voice revenues now are declining in most countries, while internet access prices also are dropping in most countries.

Sometimes, in some markets, actual price declines are disguised. That can happen when posted retail rates are not the prices most consumers pay; when customers actually buy more-costly packages over time; as prices per gigabyte fall or when prices are not indexed for inflation or compared to household income levels. In most developed countries, internet access costs less than one percent of household income, for example.

It also is common for ISPs to increase speeds on given tiers without price increases. That is an effective price cut, even if the nominal or posted retail price remains unchanged.

source: FCC

source: PCmag.com

Today, 75 percent of Xfinity Internet customers choose plans with speeds of 100 Mbps or more, double the speed those customers took just three years ago, Comcast says.

One can see the shift in consumer demand to faster-speed tiers in data from 2011 to 2015. Over that four-year period, speeds more than doubled, for some telcos, and increased by 300 percent to 400 percent for many cable operators.

source: FCC

5G Might Feature New Marketing Platform

Though 5G represents many things, it also is destined to become the key marketing emphasis for major U.S. mobile service providers, in the same way that "gigabit" has become a marketing emphasis for fixed network internet access providers.

That is not unusual. Looking even at the ways people use internet access services, the “headline” offers often do not match the actual consumption or buying patterns especially closely. In other words, the main impact of gigabit speed marketing is to drive uptake of the tiers of service slower than a gigabit, but faster than what consumers were buying before gigabit marketing began.

The big wild card right now is whether 5G will feature the introduction of speed tiers in the mobile business, as is the standard case for fixed network access. If so, headline speeds likely will assume a role similar to what happens in the fixed network business: "speed" will become a key driver of advertising and messaging.

That is the case now, but in a more-restricted sense of "our network is faster" being the attempted claim. It is conceivable that in the 5G era, that might be supplanted by a broader "pick the plan that works for you" focus, if and when it is possible to buy mobile packages based not only on usage allowances, but also access speed and possibly other attributes.

Even so, most consumers are unlikely to choose neither the fastest nor the slowest tier of service, opting instead for one of the tiers in the middle of the speed/price/value range.

Past experience suggests that will be the case.

There is likely a reason service providers do not release statistics about take rates for their headline "fastest" tiers of service. The reason is likely that take rates are not all that high.

AT&T executives have said that, where it is available, about 30 percent of customers buy a gigabit per second service, even when other tiers of service are available. In part, that relatively high take rate reflects the fact that AT&T builds gigabit networks first in neighborhoods where propensity to buy is highest.

In the fixed network internet access business, most consumers do not buy gigabit connections, even if service provider marketing, in markets where gigabit services is available, often focuses on that high-end offer.

Generally, consumers tend to buy services that offer reasonable value for reasonable price, and that is rarely the fastest speed tier or the most-basic level of service.  

Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because take rates were low.

In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about low demand. In fact, demand for 40 Mbps was less than expected.

So “gigabit” internet access remains mostly a marketing platform, not an indicator of what services people actually buy, when they have access to gigabit services. Retail price almost always is an issue for such buying patterns.

The point is that marketing efforts often are focused on elements of experience that arguably are somewhat tangential, even somewhat trivial.

Most consumers in the U.S. and other markets use their mobile devices “mostly” indoors, yet service provider marketing always focuses on the “outdoor” signal coverage.

source: Dell'Oro Group

But the marketing context does shift over time. In the 3G era, Wi-Fi access was valued by consumers because access speeds on Wi-Fi tended to be faster than the mobile network. These days, on most 4G networks, Wi-Fi is slower than staying on the mobile network.

In the 5G era, the mobile network might be the fastest connection by an even greater margin.

source: Dell'Oro Group

Live Streaming Might Well Salvage Most Linear Accounts

For 42 percent of customers who continue to buy linear video subscriptions, live programming is the primary reason for keeping such a subscription. But 30 percent of such customers say  they would cut the cord if they knew they could live stream all of their favorite sports, events, and news, a new study by Telaria and Adobe Advertising Cloud has found.

An additional 40 percent would consider doing so as well.

But live streaming is the latest new change. Live streaming provides the advantages of live television content, but consumed as a real-time OTT service rather than through a traditional cable or satellite connection.

Cost is the other major variable. Some 73 percent of customers who terminated their traditional linear video subscriptions cited cost as a reason for dropping the service.

So we may someday find that such surveys of cord cutting were not as predictive as we once thought, for a couple of reasons.

The emergence of live programming services that cost less and  are streamed may well change customer behavior. Consumers may switch to OTT linear offerings in place of legacy linear services.

Such options combine the “best” of linear services (live content) with the lower cost and possible conveniences of streaming services that show archived content.

source: Telaria, Adobe

The study polled 750 consumers between the ages of 21 and 54.

Mobile Industry Revenue Growth Falls to 0.3%

Revenue growth is the single biggest problem facing the global mobile services industry. Globally, mobile revenue has just 0.3 percent compound annual growth rate.

And even in the fastest-growing mobile markets globally--Sub-Saharan Africa-where subscriptions are growing at a compound annual growth rate of of 6.1 percent to 2020, about 50 percent faster than the global average, revenue growth is not keeping pace, expanding only about two percent per year.

source: GSMA Intelligence

That is why the search for big new revenue contributors in the internet of things, entertainment video and other potential big new markets is so intense.

Total mobile revenues in Sub-Saharan Africa reached $40 billion in 2016, an increase of 3.9 percent, year over year. But revenue growth since 2017 has been trending downwards, driven in part by economic weakness.

Revenue growth will “remain subdued for the remainder of this decade due to the increasing cannibalization of traditional voice and messaging revenues as subscribers shift to alternative platforms,” says GSMA.

As in other markets, messaging substitutes are widely used and are one reason voice and carrier messaging revenues are dropping.

With traditional voice and messaging services accounting for more than 70 percent of service revenues for many operators in the region, revenue growth from additional subscriptions and mobile internet will be countered by declining legacy revenues.

source: GSMA

SD-WAN Market Size is Not So Much the Issue: Enterprise Networking Market is Key

Revenue for the SD-WAN market overall was $221 million in the second quarter of 2018, doubling year-over-year and up 25 percent in sequential quarters, according to a report from IHS Markit.

source: IHS

Most of the revenue earned in the SD-WAN space is earned by edge device suppliers, although service provider alternatives are proliferating fast.

But that is not the point. If SD-WAN becomes a replacement for MPLS, the addressable market is much larger, on the order of $35 billion in service provider service provider revenue.

source: IHS

VMware had 18 percent market share, Aryaka was in second place with 15 percent and Cisco entered the top three with 12 percent, the report says.

source: IHS Markit

Cost of Using Internet Access Drops, Globally

By 2025, entry-level (fixed network) broadband services should be made affordable in developing countries at less than two percent of monthly gross national income per person. That matters as the cost of using internet access services as a percentage of income is a key measure of affordability.

More importantly, the total number of active mobile broadband subscriptions is expected to reach 4.4 billion by end 2018, up from 3.3 billion, at the end 2015,  the International Telecommunications Union says. That matters since mobile internet access is the way most people in developing countries use internet access services.

This is a clear case of perceiving a “glass half empty, or half full.”

In January 2017, the Broadband Commission lowered the de-facto standard for Internet  affordability to two percent of average income, from the previous five percent levels, evidence of significant price declines.

Although the majority of the world’s population (52 percent or 3.7 billion) currently remain unconnected, 3.8 billion people or 49 percent of the global population will be online by the end of 2018.

In less developed countries, prices fell from 32.4 percent to 14.1 percent of GNI.

The point is that, when making cross-country comparisons, costs must be adjusted for purchasing power.

Around 1995, the cost of buying a U.S. business connection supporting a kilobit per second might have been US$1.50 to $1.75. In other words, a 56 kbps connection might have cost as much as $98 a month.

By about 2006, even consumer internet access costs had dropped to about two cents per kbps. So a 10 Mbps connection might then have cost the same as the 56 kbps connection of 1995. In 2017, U.S. 100 Mbps connections cost about the same as a 56 kbps connection of 1995.

As speed has grown and apps have evolved, consumers now use more data (megabytes), so the cost per consumed megabyte also has fallen, even as people use more data.

Source: Boston Consulting Group

While complaints about high prices never seem to stop, in developed markets as well as the United States, the percentage of disposable income spent on fixed network internet  access is about 1.7 percent of gross national income per person.

The glass is half full.

"Factual" and "True" Observations about Internet Access Quality

Some statements are factual, but arguably not “true.” It is factual that fixed network or terrestrial network coverage gaps exist in rural and other “hard to reach” areas. In many rural areas, especially mountainous areas where few people live, there might be zero mobile network coverage, to say nothing of fixed network coverage.

The existence of such gaps might, or might not, bear much relationship to the state of service quality in dense, suburban and other areas with greater population density. In other words, it is not a “failure” of government or industry that some areas have poor to no terrestrial network coverage. Some areas simply have such low population density that only satellite service is commercially viable, even with deployment subsidies.

The simple reality is that coverage of the “last couple of percent” of people in most countries with rural, mountainous or island geographies is quite expensive. In the U.S. market, for example, it is coverage of the last one percent of people that is most tellingly expensive.

The point is that coverage gaps can exist without necessarily telling us very much about the state of internet access on a wider basis within any country.

source: ITU

source: FCC

5G Millimeter Wave Capacity: Bits per Hertz Matters

There are several reasons why the advent of millimeter wave spectrum for 5G vastly increases bandwidth, and thereby creates new business opportunities for mobile operators. Not only will millimeter wave spectrum represent a vast increase in mobile capacity (an order of magnitude to two orders of magnitude effective new spectrum), but millimeter wave spectrum also is more efficient.

Where spectrum below about 2 GHz has a spectral efficiency up to 2.5 bits per Hertz in a 4G context, and up to 3.8 bits per Hertz on a 5G network, millimeter wave spectrum has an efficiency up to seven bits per Hertz.

Basically, not only does millimeter wave spectrum represent an order of magnitude more capacity (Hertz), it also represents more bits per Hertz, as much as double what is possible on a 5G network using spectrum below 2 GHz or so. The reason has much to do with frequency and its relationship to symbol representation.  

source: T-Mobile US

By 2028, 90% of All 5G Traffic Will be Video

The importance of content, especially video content, delivered on mobile networks can be glimpsed from a new forecast by Ovum. By 2028, about 90 percent of 5G traffic is expected to be video.

Between 2019 and 2028, Ovum analysts predict, media and entertainment companies will compete for about $3 trillion in cumulative mobile content revenues, of which about $1.3 trillion will be earned on 5G networks, Ovum suggests.

By 2025, 57 percent of mobile revenue globally will be earned on 5G networks, say researchers at Ovum. By 2028, Intel and Ovum expect that number to rise to 80 percent.

he report, sponsored by Intel,  predicts that augmented reality and virtual reality will generate cumulative revenues of $140 billion (£106 billion) between 2021 and 2028.

Immersive and new media applications which don’t even exist today could generate $67 billion (£50.8 billion) a year by 2028, equivalent to the value of the entire global media market in 2017, including games, music and films, the study suggests.

Colt Technology to Launch Virtual Network in 2019

Colt Technology Services Group says it plans to start a three-stage company-wide deployment of NFV capabilities in 2019. What will that entail? The ability to use generic universal CPE (uCPE) supporting virtual firewalls, cloud-based WAN acceleration and SD-WAN.

To complicate matters, the use of generic CPE might clearly be an instance of NFV, but virtual firewalls, WAN acceleration and SD-WAN might properly be considered SDN applications.

That illustrates neatly the problem we have when describing network virtualization.

As a practical matter, it sometimes can be difficult to understand precisely what a “virtual communications network” actually does. It also can be difficult to understand how a "virtual" network is created, as that most often includes a mix of changes broadly including both network functions virtualization and software defined network adaptations.

Network functions virtualization (NFV) is one key aspect of virtualization, but not the only key aspect. It also is hard to understand what a “network function” is, in terms of “virtualizing” it.

source: fiber-optic-equipment.com

Software defined networking is the other key building block, and arguably is even more important where it comes to new service creation, where NFV mostly is about lower capital investment and operating cost.

So what are examples of network functions that can be virtualized? Routers, mobility management,policy and charging rules, session border controllers,session initiation protocol and media gateways. Providing IP Multimedia Subsystems functions (IMS) provides another example.

source: Wikibon

That is the terrain of NFV: separating data and control planes and allowing compute and control functions to be moved back from remote network elements to more-centralized locations.

SDN is more centrally related to enabling remote control of services. Software-defined wide area networks (SD-WANs) provide one good example. But supplying firewall, antivirus, video or parental control services are examples of SDN virtualization.

Note that, in general, NFV deals with network optimization, while SDN tends to involve customer-facing features.

source: Spirent

source: SDX Central

Nokia Launches Fixed Network "Network Slicing"

In a move with huge potential implications, Nokia has launched its fixed access network slicing solution, allowing fixed network service providers to create virtual networks as mobile operators will be able to do on their 5G platforms.

That might potentially enable full control of virtual networks that allow many new providers (app providers, platform providers, device suppliers, mobile virtual network operators, content providers) to essentially create their own national or global networks quickly and flexibly, with differentiated network features, to an extent.

Sure, entities have been able to construct private networks using traditional wholesale purchase agreements. But network slicing should allow faster, easier, more flexible flow-through networks all the way to the network edge. Over time, such virtual networks also should be less costly.

Network slicing allows fixed network operators to “scale to a virtually unlimited number of discrete network slices that can be independently operated, for example to run 5G mobile transport, wholesale or business services,” says Nokia.

A network slice is a logical network partition, defined within an operator network, that
can be dynamically created to meet certain SLA criteria (latency, reliability, throughput, geography).

Such virtual networks flow through the core network up to the optical network terminal or customer premises equipment. In other words, a full end-to-end virtual network is possible.

That means full control and autonomy is provided for each slice, with possibly-differentiated performance metrics for the network and services for the user of each slice. Network slicing is a product of the use of software defined networks and network functions virtualization (SDN/NFV)

In principle, network slices can be used by the network operator or any wholesale customer. The new solution is built around Nokia's cloud-native software platform Altiplano and open standards.  

Network slicing accomplishes in software much of what has traditionally been known as “wholesale,” where retail customers purchase the use of capacity from network owners.

Historically, such wholesale services have represented as much as 11 percent of total telecom service provider revenue, according to Ovum. That suggests revenue of perhaps $213 billion in 2021, Ovum predicts.

Essentially, Nokia says, network slicing creates a full Network as a Service (NaaS) offer for third parties that arguably provides a richer “own your own network” capability, compared to traditional spatial, spectral or temporal sharing techniques.

Business models might reflect historic preferences in each market. Some service providers, operating in markets where there is high reliance on wholesale, might extend NaaS using network slicing.

In other markets, where wholesale is less preferred, network operators likely will try and create new retail services that take advantage of network slicing.

source: nokia  

Nokia's programmable slicing solution creates virtual slices that look, feel and operate just like a physical network, the company says.

“Each service provider runs its own dedicated controller with a dedicated view of their slice of the network,” says Nokia.

That might well create new opportunities for any entities that formerly might have considered becoming a mobile virtual network operator or a private network operator in the fixed network realm.