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Global ISPs Unsure about Gigiabit Access Demand

October 30, 2014

Global ISPs Unsure about Gigiabit Access Demand


By Gary Kim
Contributing Editor

Global ISPs have a significant amount of uncertainty about anticipated take rates for gigabit broadband, particularly among incumbent telco respondents, a new study by Broadbandtrends suggests.

That might not be too surprising, given the huge gap between gigabit speeds--and potential business models--and typical speeds in most regions. Global average connection speeds were 4.6 Mbps in the second quarter of 2014, for example. The global average peak connection speed was 25.4 Mbps, according to Akamai (News - Alert).  

Price also is an issue. In the four years between 2008 and 2012, fixed broadband prices fell by 82 percent overall, from 115.1 percent of average monthly income per capita in 2008 to 22.1 percent in 2012, for example.

How that translates to per-household costs depends on the average or typical number of people who live in a single household.

In a market where there are four people per household, that suggests fixed network Internet access costs about 5.5 percent of monthly income.

In markets where Internet access might represent 5.5 percent of household income, price clearly matters.

To be sure, the biggest price drop occurred in developing countries, where fixed broadband prices fell by 30 percent year over year between 2008 and 2011, according to the International Telecommunications Union.

The average price per unit of speed (Mbps) also decreased significantly between 2008 and 2012, with a global median price of USD 19.50 per Mbps in 2012, almost a quarter of the price that was being charged in 2008.

The survey of 88 Internet service providers (ILEC, CLECs, Municipalities, Utilities, Wireless, Cable and Alternative over-builders) polled respondents in North America, Europe, Middle East and Africa, Asia Pacific, and Caribbean and Latin America regions.

More than half of respondents are currently offering gigabit access to businesses and Institutions, while 34 percent are offering such services in the residential market

“Being perceived as a technology leader was the overwhelming driver for gigabit broadband deployments, said Teresa Mastrangelo, Broadbandtrends principal analyst.  One suspects that is primarily an issue for commercial providers.

“For some operators, particularly municipalities, gigabit broadband is proving to be the foundation that can improve and enrich education, healthcare and public services as well as the economic engine for growth, investment and job creation,” said Mastrangelo.

Respondents suggested cloud-based backup and support for Ultra HD (4KTV) were the emerging new apps that could drive gigabit adoption.

Still, uncertainty about the business case is logical enough. In most markets, consumers have a hard time affording fixed network Internet access at far lower speeds.

Edited by Stefania Viscusi
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