5G Will Not Drive the Next Great Wave of Innovation; Neither Will the Internet

These days it is hard to clearly delineate where 5G from edge computing begins and ends. The same thing might be said of 5G and the internet of things; or IoT and artificial intelligence or  machine learning; or 5G and AI. 

 

source: IET 

All that matters because it will be hard to “prove” whether it is 5G, edge computing, AI or IoT that has had some benefit for consumers, producers, firms or society. In many cases, it is the interworking of several technologies and services that create the benefit.  

source: Medium 

In more subtle ways we can argue that metaverse and blockchain--though perhaps independent variables, also will provide value for 5G, edge computing, AI and IoT that is hard to separate. 

It is the complex of technologies, not any single technology, that drives the wave of innovation. 

source: Medium 

The key takeaway is that we might now be in a transition of waves, where the growth drivers shift. Some proponents of 5G might argue that is the key innovation. Those in the computing industry will say it is cloud and edge computing. 

Others will point elsewhere, to widely-applied artificial intelligence. 

source: Visual Capitalist 

A key observation is that it is the complex of technologies--not a single driver--that underpins an innovation cycle. And, as always, we might be mistaken about the complex of technologies that fuel the next wave. 

Some of us have seen “robotics” on the “next wave” list for almost 50 years, and it has arguably not happened. So we might be wrong about the actual drivers of the next wave. 

source: The Geography of Transport Systems 

By definition, it will not be 5G, as we replace mobile networks every decade or so. Nor is the “internet” per se likely to continue as a driver.

People Might be Your Greatest Resource and Greatest Impediments as Well

Career resilience might be defined as the ability to recover from setbacks, adapt well to change, and keep going in the face of adversity. Strikingly, a survey by U.K. consultants Sarah Bond and Gillian Shapiro consultants suggests difficult relationships and organizational politics are paramount at work, respondents indicated. 

In other words, co-workers were the “biggest problems” women faced at work, causing the most setbacks. .

Fully 75 percent of respondents said that the biggest drain on their resilience reserves was “managing difficult people or office politics at work.” 

source: Bond, Shaprio, HBR 

It often is said that “people are our greatest resource.” It may also be the case that “people are the greatest sources of friction” within organizations.

Top End U.S. Broadband Speeds Now Range Between 2 Gbps and 5 Gbps

Multi-gigabit speeds now are becoming the top-end broadband offers in the U.S. market.  Comcast has introduced 3-Gbps services for business. Ziply has introduced symmetrical 2-Gbps service. Google Fiber has added 2-Gbps as well. 

Frontier Communications is doing the same. Verizon offers 2-Gbps Fios service. AT&T sells both 5-Gbps and 2-Gbps service. Many of those offers feature symmetrical bandwidth. 

That is not to say most consumers will ever buy the top-end service packages. Indeed, whatever the top end, most consumers buy plans in the middle ranges of performance and price.   

None of that should come as a surprise. U.S. internet bandwidth increases at just about the rate one would expect from Moore's Law. In the broadband business we have Nielsen's Law, which suggests speeds have a growth rate nearly 50 percent per year at the top end. 

Nielsen’s Law has operated since the days of dial-up internet access. Even if the “typical” consumer buys speeds an order of magnitude less than the headline speed, that still suggests the typical consumer--at a time when the fastest-possible speed is 100 Gbps to 1,000 Gbps--still will be buying service operating at speeds not less than 1 Gbps to 10 Gbps.  

source: FuturistSpeaker 

So top end speeds in the terabits per second are virtually inevitable by about 2050. The emergence of offers between 2 Gbps and 5 Gbps now is simply evidence that the trend continues.

U.K. Gigabit Internet Often Costs Between $72 and $83 Per Month

Gigabit-per-second home broadband prices in the United Kingdom vary by internet service provider and location, but Virgin Media O2 costs about £62 (US$82) per month. BT sells its gigabit service for £55, or about US$72. 

source: Point Topic

Content Drives Capacity Investment

50 years ago investment in transcontinental communications cables was driven by telcos. These days investment is driven by content providers, especially those supplying video content. And that trend has escalated since about 2020, according to TeleGeography data. 

source: TeleGeography 

Video content drives bandwidth demand, and also creates the owners’ economics that incentivize content providers to own, build and operate their own transport networks. 

source: TeleGeography 

In a similar way, data centers frequently now are built specifically for a relative handful of anchor tenants who are hyperscale cloud computing suppliers. 

To be sure, data center business models can use either retail or wholesale models. But one salient difference is that some wholesale data center business plans are built on the assumption that there are a handful of potential customers, namely the hyperscale app providers. 

source: TechTarget 

That is not to deny that larger enterprises might be tenants at many wholesale data centers. It is to say that the anchor tenants will be a small number of hyperscalers. 

source: Equinix 

New wholesale data center investments will be significant in Asia, for example. 

source: TeleGeography 

Among the many changes to the connectivity industry over the past 40 years is a shift of capacity investment to content providers and hyperscale cloud computing suppliers; a shift of media types to video; emergence of remote computing and the impact that has on computing architectures, data center requirements and connectivity locations. 

Broadly, the internet ecosystem now drives capital investment in computing and connectivity. Connectivity providers are simply a part of that broader ecosystem.

Wholesale Business Models Will Dominate Much Data Center Investment

Data center business models can use either retail or wholesale models. But one salient different is that some wholesale data center business plans are built on the assumption that there are a handful of potential customers, namely the hyperscale app providers. 

source: TechTarget 

That is not to deny that larger enterprises might be tenants at many wholesale data centers. It is to say that the anchor tenants will be a small number of hyperscalers. 

source: Equinix 

New wholesale data center investments will be significant in Asia, for example. 

source: TeleGeography

Truth, Lies, Statistics

Language always matters. Definitions and assumptions always matter, because the truth matters. Methodology matters, in that regard. 

The NPD Group says only 50 percent of homes in the continental U.S. have “true broadband speed of 25Mbps download or higher.”

That can be--and will be--interpreted at least two ways. It could mean that internet service providers are way behind the curve in making quality broadband available, or it could mean that consumers choose not to buy it. 

The former is a failure of supply; the second is a consumer choice. It matters which we are talking about. In fact, Openvault test data does not support the NPD assertions. In the third quarter of 2021, for example, 9.8 percent of actual consumers had test data showing downstream speeds “less than 50 Mbps.”

The percentage of customers unable to get 25 Mbps obviously is less than that. 

Though “average” speeds change all the time, the Openvault data show that by the third quarter of 2021, about 66 percent of all U.S. internet access buyers were getting speeds between 100 Mbps and 400 Mbps. 

source: Openvault 

While it might have been true that half of U.S. consumers were buying services operating between 100 Mbps and 200 Mbps a year earlier, it was by the third quarter of 2021 very hard to determine how many were really buying services unable to meet the FCC definition of 25 Mbps downstream. 

What also is undeniable is that most speed tests are conducted by consumers using Wi-Fi. That means the tests understate speed, as Wi-Fi speeds often are many times slower than delivered ISP speed. 

The point is that ISP delivered speeds quite often degraded by performance of the in-home Wi-Fi networks, older equipment or in-building obstructions. Actual speeds delivered by the internet service provider to a router are one matter. Actual speeds experienced by any Wi-Fi-connected device within the home are something else. 

source: CMIT Solutions 

In practice, Wi-Fi speeds can be an order of magnitude slower than the speed actually delivered by the ISP. So when a consumer using Wi-Fi measures 25 Mbps, the delivered speed can be as much as 250 Mbps. 

NPD Group says about its methodology that “the report is based on a combination of sales data, speed test results, consumer surveys, FCC data and other sources.”

That implies demand side dales data and speed test results. Consumer surveys can be either demand or supply side based. The Federal Communications Commission data tends to be supply side (state of facilities and availability). 

To be clearer, what NPD likely means is that 50 percent of U.S. consumers choose to buy internet access at speeds less than 25 Mbps. But that cannot be true, if other demand side studies are correct. 

The storyline that U.S. internet access is slow or expensive seems irresistible, even if it is questionable. A study by Speedtest of 2020 internet access speeds showed the United States had the highest performance of all countries who are members of the G-20. 

 

source: Ookla

So much for the demand side. On the supply side, 

A recent study by the European Telecommunications Network Operators association says prices are not high.  

“In fact, 34 percent of homes receive internet access at speeds of less than 5 Mbps, including 15 percent  that do not have any internet access. The key phrase is “receive.” It is the speed they purchase. 

There are other important nuances. When do people take speed tests? Primarily when they are having a problem. Almost nobody routinely takes speed tests when performance is untroubling. So there is a bias to the taking of speed tests when networks are most congested. 

Is it possible that half of U.S. homes do not receive 25 Mbps? It seems highly doubtful. If there are 10 concurrent devices active inside a home, might each device see performance that looks like “less than 25 Mbps?” That is possible, if all 10 devices are simultaneously active and delivered speed is about 250 Mbps and all the devices use Wi-Fi.

But to argue that “half of U.S. homes” do not “receive” 25 Mbps seems contradicted by available data on actual usage. And that is just the demand side.

Between 60 percent and 80 percent of U.S. home locations can buy gigabit service if they chose to do so. Not all do so. 

But that reflects a consumer choice, not a failure of supply. 

It is highly likely that at least 80 percent of U.S. homes can buy internet access at speeds no lower than 500 Mbps and 1 Gbps if they choose to do so. Over time, as average supplied speeds climb, they will eventually do so.