Does Broadband Increase Home Values?

There is an apparently-direct correlation between use of broadband internet access services and the general level of economic development in any country.

source: Springer.com

In other words, household income and use of higher-speed internet access is directly correlated.

source: Brookings

So it is perhaps not unusual that some try and establish a causal relationship between deployment of broadband facilities and economic growth, home prices or income.

Some believe that access to a fiber-to-home internet access connection can increase home value as much as three percent.

The Fiber Broadband Association also claims gross domestic product is higher where gigabit internet access is available.

Likewise, the association claims that optical fiber access increases the value of multiple dwelling units.

Most would likely agree that a correlation between home prices, economic health and internet access is logical. Perhaps few of us really believe internet access “causes” either higher home prices or economic growth. In fact, it might be more logical to argue that areas with h stronger economic growth drive job growth and average wages, which in turn drive higher average household incomes; higher discretionary income and therefore higher demand for gigabit and higher-speed internet access.

In other words, correlation is not causation. And if there is causation, wealthier consumers may drive demand for more-expensive internet access. That, in fact, is precisely the model Google Fiber, AT&T and many independent internet service providers have done, when marketing.

ISPs deploying gigabit access have deliberately selected wealthier neighborhoods, where demand is strongest.

To be sure, virtually nobody would discount the value of high-quality broadband access, anymore than observers would question the value of wastewater, clean water, electrical services, roads, airports or railways.

What is not clear is a causal relationship between utility, transportation and communication services and economic growth, housing prices, average wages or job creation. “Necessary but not sufficient” is a reasonable assumption.

source: Blandin Foundation

Ofcom Ponders Greater Duct Access for BT Competitors

Optical access at today’s Ethernet speeds remains quite expensive, an analysis by Ofcom has found. At current tariffs, any gigabit connection over an optical fiber drop generates, over three years,  no net revenue at a distance of 80 meters, and actually loses money at distances up to 100 meters, if any supplier has to install new ducts.

All those connections are profitable over three years when existing ducts can be used. And that is why Ofcom is considering liberalizing duct access further than is possible today.  

source: Ofcom

Common Carrier Regulation MIght Have Produced $24 Billion to $30 Billion in Lost Investment

With the caveat that in many ways lower capital investment in communications networks sometimes can be viewed as a positive, utility regulation of internet access had a negative $10 billion to $13 billion impact on capital investment by U.S. internet service providers, according to Dr. George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Analysis chief economist.

“I find that while the decline in capital spending rose in 2015 and 2016 stopped in 2017, investment in the telecommunications sector is materially compressed, being about $10-to-$13 billion (or 12-to-15 percent) below expectations,” says Ford.

source: Phoenix Center

Since 2015, some $24-to-$30 billion in investment has been lost because of Title II regulation, Ford argues.

“Capital spending is a cost, not a benefit,” Ford says. The point is that “higher capex” is not important in and of itself, but only as it delivers consumer benefits. “If the same level of benefits could be obtained at a lower level of capital spending, then society would be better off,” Ford notes.

That might well be the case in coming years, in part because 5G might be able to supply end user benefits at lower costs than fixed networks. Others might point out that increasing use of open source technology, unlicensed or shared spectrum, spectrum aggregation and other tools might also help moderate capital investment requirements.

“Analysis of recent capital spending trends suggests many of the larger providers of broadband services— including AT&T, Comcast and Charter—are not spending as much as expected in 2018, and Verizon has indicated it will materially reduce capital spending for 2018 and 2019,” Ford notes.

The main point is that internet service provider capital investment during the 2015 to 2017 period of common carrier regulation reduced capital investment by $24 billion to $30 billion. Continued uncertainty about a possible return of such regulation might also be depressing investment n 2018, Ford suggests.

All Technology Might Require Trade-Offs and Prudent Usage

Mobile phone use and Wi-Fi can have health effects, some studies have found. Such studies have been conducted on many types of non-ionizing radiation, for decades.

Non-ionizing radiation includes exposures such as electromagnetic fields (EMF) produced by power lines, radio frequency energy used in microwave ovens or emitted by cell phones, and solar ultraviolet radiation. Whether such exposure is dangerous, or not, has been argued for decades.

Prudent usage is the advice sometimes given for using any products that product non-ionizing radiation.  

Some have argued such potential effects are reasons for not deploying new mobile networks. Others have argued users simply have to be conscious of potential risks and adjust usage accordingly.

As with nearly all technologies, risks and rewards have to be balanced. There are some risks associated with automobiles and airplane travel, for example, and most us can balance the risk of using or not using those technologies.

Flying in an airplane does expose passengers and crew to more solar radiation than is experienced at ground level. So people have to balance such risks with the benefits of flying.

That is not a bad way to balance other risks as well. Be prudent.

Are IoT Subscriptions the Upside from 5G?

“If you don’t believe in IoT growth, there’s no point in investing in 5G,” Hatem Zeine

Founder and CTO of Ossia has said.

Perhaps the biggest opportunity for communications service providers in the 5G era is internet of things services beyond connectivity. Though it will be far from easy, the trick is to take valuable and essential solutions that might formerly have been sold as “products” and turn them into subscriptions.

Of course the value will continue to be “outcomes” of value to buyers: lower cost, higher output, less waste, higher product value, faster time to market, higher revenue or higher profits.

The point is that the business upside from IoT is not sensors or even insights gleaned from sensor data. The value comes from ability to change business processes in ways that cut costs or boost revenues and profits. And that means participation in IoT subscription services.

Many observers say subscriptions are the new growth frontier for many, if not most, products.

Turning products into subscriptions (everything as a service) is a big business shift many believe is irresistible. Automating the process of buying staple products or discretionary products Is a way to lock in repeat business. And some would note that 41 percent of all consumer purchasing is repeat business.

Of course, telecom has always been sold as a subscription, which does raise questions about how relevant that “everything as a service” trend might be, and where there are additional opportunities for communications service providers.

In most cases, the answer is that service providers win by offering more subscription products as part of their core offerings. Mobile video services provider a good example. The innovation is not the “subscription” revenue model; that is the legacy format, after all.

Instead, what is new is participation in the new business as a distribution channel.

Communications providers have some experience with turning products into services. Hosted business voice (hosted IP PBX or hosted IP telephony) provides a recent example, where a recurring subscription replaces a customer’s need to own and manage a business phone system.

Smartphones often are functionally subscriptions, not “products.” Even if consumers actually buy their devices, they often do so as two-year payment plans. And as support for many devices now routinely lasts for only three years, for many consumers “ownership” of a smartphone resembles a “phone subscription.”

By some estimates there are at least 2,000 subscription-based consumer product businesses in operation, selling food (Blue Apron and HelloFresh), grooming products (Dollar Shave Club and Harry’s), beauty supplies (Birchbox and Ipsy), and clothes (Stitch Fix and Trunk Club).

In principle, the substitution of “hosted PBX” or “business phone functions as a service.” Historically, telecom companies sold such services as “Centrex.” These days, both incumbent telcos and third parties sell “business phone functions as a service.”

U.S. Consumers View "Choice" in New Ways

Ever since the advent of satellite-delivered programming, choice has been the core value linear video subscriptions have offered. But value now has become an equally-big issue.

Some 90 percent of U.S. residents polled by Morning Consult say that the most important factor when deciding to subscribe to a TV or streaming service is cost.

Some 56 percent say cable TV is "unaffordable" and 47 percent say the same about satellite, while just 17 percent deem streaming unaffordable.

But the real issue is value. Those same respondents also say they object to paying for channels they do not watch, and prefer to buy only channels they actually watch. On the other hand, consumers also say they value services with quantity and quality of shows.

source: Morning Consult

So “choice” has a new meaning. Choice once meant having scores to hundreds of programming choices, not three broadcast TV stations. Increasingly, choice now means “paying only for what I choose to watch.”

Where the traditional maxim has been “I want what I want, when I want it,” the new mantra might be “I want only what I want, when I want it.”

source: Morning Consult

source: Morning Consult

Main Trend in Video Always is "More Choice"

Even if the initial impetus for the cable TV business was signal access (bringing metro market TV signals to distant areas unable to receive the signals off air), the more-recent growth since the advent of satellite-delivered programming in the mid-1970s is “greater programming choice.”

“Choice,” in those days, meant “access to more channels and genres.” These days, “choice” means “ability to buy only the channels I want.” The former trend drove adoption of linear subscription video. That latter drives over the top subscription video.

source: Brightcove

Whether you look at linear video or any form of over-the-top streaming, the value proposition always is about "more choice."

Value is the other big issue, now. Potential customers want greater value, which tends to mean lower prices per subscription.