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. 

Google Leads Market for Lots of Reasons Other Than Placement Deal with Apple

A case that is seen as a key test of potential antitrust action against Google, with ramifications for similar action against other hyperscale app providers such as Apple, Meta and Amazon, will be decided this year. 

The U.S. Justice Department sued Google in U.S. District Court for the District of Columbia, alleging that the company illegally protected its monopoly in internet search, partly by paying billions to persuade companies, including Apple and Samsung, to use its search engine.

But some might argue such deals are not unusual in business. In retail, manufacturers sometimes pay stores "slotting allowances" for prominent shelf placement. This ensures their products are more visible to consumers, potentially increasing sales. Similarly, Google's payment gives it higher visibility on iPhones.

In media, websites might offer premium ad placements for a higher fee. These placements are more likely to be seen by users, potentially driving more clicks and revenue. Google's payment to Apple could be seen as a form of premium placement for its search engine.

Some media outlets publish sponsored content for a fee. Google's prominent placement on iPhones could be viewed as a form of sponsored content, where Apple is "sponsoring" Google Search as the default option.

Cable companies might charge a premium for certain high-value channels to be included in their packages. 

But some might argue those analogies do not apply so well. In retail, some might argue, there are typically multiple brands competing for shelf space. Consumers can easily choose alternative products on nearby shelves. On iPhones, changing the default search engine can be cumbersome and some users might not even be aware they can do so.

Others might argue that transparency is an issue. The argument is that slotting allowances and pay-per-click placements are often disclosed, so consumers know a product placement is sponsored.

Likewise, prior precedent will play a key role in determining the outcome. 

Case	Year	Court	Key Takeaway	Relevance to Google-Apple Deal
Microsoft v. US	1998	US Court of Appeals	Dominant companies can't unfairly disadvantage competitors.	Supports arguments that Google's payments stifle competition.
Eastman Kodak Co. v. Image Technical Services, Inc.	1996	US Court of Appeals	Dominant companies can't use their power to foreclose competitors from markets.	Supports arguments that Google's deal limits user choice for search engines.
FTC v. Qualcomm	2017	Federal Trade Commission	Tying arrangements where access to one product is conditioned on another can raise antitrust concerns.	Supports arguments that Google's payments create an unfair tie-in between iPhones and Google Search.
Sun Microsystems, Inc. v. Microsoft Corp.	1993	US Court of Appeals	Companies have some freedom to choose what software to integrate.	Could be used by Apple to defend its right to choose a default search engine.
Verizon Communications Inc. v. FCC	2012	Supreme Court	Companies might have more leeway in managing their platforms.	Potentially weakens arguments against exclusive deals on private platforms like iPhones.

The coming decision hinges on whether Google's payments stifle competition. The judge will have to balance consumer choice and possibly the impact on innovation. Users can change their default browser, though, so the issue is whether such default installs actually reduce competition, or only reinforce user preferences. 

According to StatCounter, Google’s Chrome holds about 65 percent of the installed base or share, globally. The argument on one side is that this reflects user preference. The argument on the other side is that such leadership is dependent on tying agreements to some extent. 

Browser	Percentage Share	Source
Chrome	64.73%	StatCounter
Safari	18.56%	StatCounter
Edge (Microsoft)	4.97%	StatCounter
Firefox	3.36%	StatCounter
Opera	2.86%	StatCounter
Samsung Internet	2.59%	StatCounter
Other Browsers	2.93% (combined)	StatCounter

But there are many reasons why Google is dominant in search. Google's search algorithm is widely considered the most advanced and effective, delivering relevant and accurate results to users' queries. In other words, users might simply prefer Google because they believe it delivers the best results. 

In that regard, extensive troves of data might allow for greater and more effective personalization and search accuracy as well. 

Some might point out that Google possesses a vast amount of user data and search history, allowing it to personalize search results and continuously refine its algorithms for better performance. Others might point to global presence; language support and local customization.

Network effects--or possibly simply scale benefits--then also kick in.  More users generate more search queries and data, which Google can leverage to improve its search algorithms and personalize results. 

A larger user base exposes Google Search to a wider range of searches and information needs, which might arguably help the algorithm identify emerging trends and improve its understanding of user intent.

Still, “network effects” refer to platforms where value grows as the number of users grows. That is not necessarily an advantage for Google search. No single user or query necessarily benefits from all other users in a traditional way. 

It might be less clear how the Google ecosystem of products and services (Gmail, Maps, YouTube) contributes to "stickiness,” but some value is to be found there. 

Deals with device manufacturers like Apple (to be the default search engine) or browsers like Firefox (to be the default search provider) help by ensuring prominent placement on popular platforms.

Others might point to Google’s ability to keep investing in its product, given its strong revenue position, as well. 

The point is that there are all sorts of potential ways Google might benefit from trends that flow from having large market share. But Google arguably only benefits because end users prefer it. Maybe Google search leads simply because users prefer it to other products. 

Study Title	Publication Date	Publishing Venue	Key Findings	Network Effects?
Why Google Search Matters: Understanding User Preferences for Leading Search Engines	2022	Journal of the Association for Information Science and Technology	Examines user preferences and identifies factors like search accuracy, result comprehensiveness, and user interface design as key drivers of Google's market share.	Indirectly explores network effects through the role of data in improving search accuracy.
The Google Search Algorithm: A Survey	2020	ACM Computing Surveys	Analyzes the technical aspects of Google's search algorithm, highlighting its sophistication and ability to handle complex user queries and natural language processing.	Focuses on the technical underpinnings of Google's search advantage, not directly on network effects.
The Data Advantage: How Google Uses Big Data to Power Search	2021	Harvard Business Review	Discusses Google's vast data collection and its role in personalizing search results and improving algorithm performance.	Argues that data advantage is a key driver of Google's success, potentially linked to network effects through the continuous accumulation of user data.
The Network Effects of Search Engines: An Economic Analysis	2019	Information Economics and Policy	Analyzes the network effects concept in search engines, acknowledging the role of data accumulation but suggesting alternative explanations like brand reputation and switching costs.	Provides a critical perspective on the role of network effects in Google's dominance.
Search Bias and User Lock-In: An Examination of Google's Search Engine Market Power	2023	Journal of Competition Law & Economics	Investigates potential anti-competitive practices by Google, raising concerns about lock-in effects that might discourage users from switching to alternative search engines.	Discusses the potential negative aspects of a dominant search engine with a large user base.

Also, the search function has broadened over the decades, with different sorts of searches, many related to commerce, now prominent. That might matter if courts have to evaluate search market power. There are more types of search and more providers. 

Study Title	Publication Date	Publishing Venue	Key Findings	Traditional Search %	Commerce-Related Search %
Evolving User Search Behavior: A Comparative Analysis of Traditional and Shopping Queries	2023	Search Engine Journal	Identifies a significant rise in shopping-related queries, with users increasingly starting their product research online.	62%	38%
The Rise of "Buy" Online: How Search Trends are Shaping Consumer Behavior	2022	McKinsey & Company	Reports a surge in searches combining informational keywords with shopping intent (e.g., "best laptops for students 2024").	58%	42%
Search Intent: Decoding the Why Behind the What	2021	Moz	Categorizes search queries by intent (informational, navigational, transactional). While informational searches remain prevalent, transactional searches are steadily growing.	68%	32%

The point is that the search market is broader than it used to be, and Google search is part of that broader market. 

Category	Potential Leaders
Search Engines	Google, Bing
Shopping Platforms	Amazon, Walmart, eBay
Social Commerce Platforms	Instagram, Pinterest
Comparison Shopping Engines	Google Shopping, Shopzilla
Voice Assistants	Siri (Apple), Alexa (Amazon)

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