Most Consumers Want "Good Enough" Home Broadband

Though regulators and advocates often focus mostly on availability (coverage) and quality (speed), consumers often prioritize value, preferring a “good enough for my needs” approach where recurring price might be more important than raw performance. 

And that might explain the demand for fixed wireless services in many markets, where FWA offers enough speed at lower prices than services provided by telco digital subscriber line, telco fiber-to-home or cable TV home broadband. 

In the U.S. market, FWA appears to have dented demand for cable services, in particular. 

source: Opensignal 

Though most consumers would likely have a hard time quantifying how much speed their households require, it remains true that beyond a fairly low level of access speed, users gain very little, in terms of performance (quality of experience) when shifting to services offering speeds faster than about 25 Mbps per user in the downstream.  

source: FCC 

To be sure, the percentage of U.S. customers buying gigabit or multi-gigabit services has steadily increased since 2021, while the percentage of customers buying service at speeds below 50 Mbps has dropped.

But it might be worth noting that about 25 percent of the home broadband market continues to buy services at the lower end (200 Mbps or less) of home broadband speeds sold by ISPs. That suggests the market opportunity for FWA is about a quarter of the market, so long as speeds top out around 200 Mbps. 

At the moment, FWA could address more than half the U.S. market if it were upgraded to offer speeds up to 400 Mbps. 

source: OpenVault 

We might well assume that buyers of gigabit-speed services are mostly driven by service “quality” as measured by downstream speed, upstream speed, unlimited data usage and network reliability. That might broadly account for up to 30 percent of the market. 

This segment includes gamers, streamers, professionals with high bandwidth needs and larger families. 

In contrast, perhaps up to 30 percent of customers seem to buy the most affordable option, including students, budget-conscious families, or those with limited online activity. By definition this segment is most price conscious, even if that means lower speeds. 

The broad middle of the market might represent up to 40 percent of customers who balance price and features. This segment prefers “good enough” speeds, sufficient data allowances, and reliable service, at a reasonable cost, somewhere between the most-expensive and most-affordable tiers of service. 

Service Tier	Percentage	Key Driver
Higher-Cost (High Speeds, Unlimited Data)	30 percent	Value-Driven
Median Cost (Balanced Speeds & Data)	40 percent	Balanced Value
Lower-Cost (Lower Speeds, Data Caps)	30 percent	Price-Driven

In many cases, FWA could appeal to both “balanced value” and “price-driven” segments of the market, in particular for single-person households or dual-person households with lower usage. 

Do Home Broadband Speed Rankings Really Matter Much?

Ookla’s May 2024 report on mobile and home broadband shows Singapore and Hong Kong leading the list of countries with the fastest speeds, which is not surprising at all. 

You might not have expected Chile to rank third, the UAE and Iceland in spots four and five. The United States ranks sixth, which is sort of an anomaly. Over the past half century or so, it would not have been uncommon for U.S. metrics to rank anywhere from 12th to 20th on measures of tele-density or internet access bandwidth. 

We might reasonably ask how much importance such speed rankings actually mean. One might argue the rankings generally suggest that small city-states and small countries can produce good broadband infrastructure faster and better than any large country, simply because the physical facilities are smaller in coverage area, with higher density. And network size and population density directly affect the cost of such facilities. 

Hong Kong, Singapore and other such areas will always be able to create high-performance access infrastructure faster than any continent-sized country with low population density. 

Nor, looking only at city-states and small countries, might we see clear correlations between growth and home broadband speeds. Singapore and UAE might be strong performers in that regard. But other small countries might not show the same strong correlations. It might be the case that only rarely, if ever, are home broadband and economic growth rates uncorrelated. 

But the correlations are not consistent. So it is worth speculating about how important such rankings actually are, when it comes to applying the tools and wringing business or economic value out of them. 

To be sure, lots of studies suggest there is a correlation between economic growth (gross domestic product) and home broadband availability and speed, with perhaps greater correlations related to availability than speed. 

Study	Year	Key Findings
Ericsson, Arthur D. Little, and Chalmers University of Technology	2011	Doubling broadband speeds can add 0.3% to GDP growth
World Bank	2009	10% increase in broadband penetration associated with 1.38% increase in GDP growth for developing countries
OECD	2011	Positive but diminishing returns from increased broadband speeds on economic growth
ITU (International Telecommunication Union)	2012	Broadband has a statistically significant impact on GDP growth, but effect varies by region and level of development
Rohman and Bohlin	2012	Doubling broadband speed contributes 0.3% GDP growth in OECD countries

But it might also be worth noting that there are similar correlations between gross domestic product gains and educational attainment; rule of law; capital investment; income and wealth; or infrastructure density and availability. 

And correlation is not causation. 

In fact, “causality” might even be the reverse of what we might think. 

Keep in mind that economists generally economists might generally agree there is a  “causal” relationship between growth and:

• Capital accumulation (both physical and human)  

• Innovation and technological progress (research and development; creation of new ideas)

• Macroeconomic stability helps (Low and stable inflation; sound fiscal policies)

• Openness to trade

• Quality Institutions (rule of law and low levels of corruption)

• Financial markets well developed

So we might consider education an input to future capital; innovation or technology development. We might consider home broadband another form of capital. 

But it's often unclear whether some factors said to cause growth are themselves caused by growth. Does financial development, trade openness and political stability cause growth, or does growth cause financial development, trade and political stability? We cannot really say. 

Consider “good schools,” quality home broadband, medical care or other supposed platforms aiding growth. 

It might plausibly be the case that demand for good schools and fast internet access, for example. Are the product of demand from citizens who already have the resources to pay for such quality broadband, as well as the use cases. 

Likewise, if local schools are funded by property taxes, then “good schools” might be “caused” by affluent citizens who can afford expensive housing, which comes with high property values, leading to high tax revenues to fund schools. 

In fact, one might well argue that often, the prevalence of quality home broadband, transportation infrastructure or any number of other supposed producers of economic growth might instead be a result of pre-existing strong economic growth. 

Rather than robust economic growth being “created” by quality broadband; educational attainment and other drivers, it is equally plausible that pre-existing high growth creates wealth and resources that in turn lead to the other outcomes. 

You might suspect educational attainment, for example, is correlated with stronger economic growth, and studies support that notion. But a flywheel might be at work, where pre-existing high attainment leads to more attainment; high growth reinforcing more high growth. 

Study/Source	Correlation/Finding
Georgia Tech study	0.75 correlation between years of education and GDP per capita. 1 year increase in education associated with 34.4% increase in GDP per capita.
Hanushek & Peterson analysis	Raising US student test scores to Canadian levels estimated to add $77 trillion to US economy over 80 years.
International comparison	Countries with top test scores (e.g. Singapore, Hong Kong) had ~2% higher annual GDP growth compared to average.
OECD countries analysis	Positive correlation between education expenditure at all levels and GDP, stronger over 5-10 year periods.
Developing countries analysis	Positive correlation between primary education spending and GDP growth. Negative correlation for secondary/higher education.
General finding	Education is "intrinsically linked to economic growth", influencing both personal salaries and national GDP.

Likewise, studies of transportation infrastructure also tend to be correlated with gross domestic product, but sometimes only moderately. 

Transportation Mode/Metric	Correlation with GDP	Time Period	Source/Study
Civil aviation (freight)	0.907 (high)	1990-2007	IOP Science study
Civil aviation (freight)	0.711 (strong)	2008-2017	IOP Science study
Inland waterway (freight)	0.816 (strong)	1990-2007	IOP Science study
Inland waterway (freight)	0.789 (strong)	2008-2017	IOP Science study
Road transport (freight)	0.715 (strong)	1990-2007	IOP Science study
Road transport (freight)	0.741 (strong)	2008-2017	IOP Science study
Railway (freight)	0.668 (strong)	1990-2007	IOP Science study
Railway (freight)	0.558 (moderate)	2008-2017	IOP Science study
Water transportation (freight)	0.750 (strongest)	1989-2018	E3S Conferences study
Highway (freight)	0.709 (strong)	1989-2018	E3S Conferences study
Pipeline (freight)	0.700 (strong)	1989-2018	E3S Conferences study
Railway (freight)	0.678 (strong)	1989-2018	E3S Conferences study
Civil aviation (freight)	0.593 (moderate)	1989-2018	E3S Conferences study

The point is that we cannot be very sure that faster home broadband is the result of growth or the cause of growth. Nor can we know very much about how the “quality” of broadband (speed and latency performance, for example) produces growth or is a reflection of growth. 

Philosophy, Not Independence, is July 4 Importance

July 4th is a holiday celebrated in the United States that often is assumed to be about political independence. In fact, it is about other things as well. There was a philosophy about the post-independence nature of government and the relationship between citizens and government. 

Here’s the standard rendition of values and beliefs underlying the experiment in democracy were convictions about::

• Individual rights and freedoms including freedom of speech, religion, press, and assembly.

• Limited government: small government with minimal intervention in people's lives and the economy.

• Rule of law: Rule of law and constitutionalism necessary to protect individual rights.

• Natural rights: Individuals possess inalienable natural rights that cannot be taken away by the government.

• Free market economy: Laissez-faire economic system with minimal government regulation.

• Private property rights: Strong belief in the right to own and develop private property.

• Separation of powers: Constitutional limits on government power and checks and balances.

• Social contract theory: The idea that legitimate government authority derives from the consent of the governed.

• Religious tolerance: Support for freedom of religion

• Equality under the law: Belief in equal treatment of all individuals before the law. 

It is those principles and values that matter, not political independence, which was merely the enabler or platform. It is those philosophical beliefs that have universal value, not just particular importance for one country.