GigaOM » Broadband Penetration

Wow! Internet capacity has doubled to 77 Tbps in two years.

Stacey Higginbotham — Thu, 06 Sep 2012 14:05:38 +0000

To fill up the entire Internet you’d need to flood the networks with 77 terabits per second of content, since that’s exactly how much capacity there is according to Telegeography. The analyst firm said today that while 77 Tbps of capacity is impressive, the total rate of growth in capacity is slowing to its lowest rate in five years thanks to the fewer new subscribers and the increasing use of content delivery networks.

We’ve covered the slowdown in broadband subscribers in the U.S., although there is an untapped market of roughly 19 million Americans who don’t have broadband — it appears most of them can’t afford it or just don’t want it. As for CDNs they are carrying ever more content and caching it at the edge, so fewer bits have to traverse the long haul networks. This saves the ISPs money and network investment costs.

Which means that instead of doubling (or more), Internet capacity around the world increased by 40 percent between 2011 and 2012. Happily for all of the ISPs complaining about not being able to meet demand, it appears that the growth of traffic is also slowing internationally at peak times. Telegeography says average international internet traffic grew 35 percent in 2012, down from 39 percent in 2011, and peak traffic grew 33 percent, which is far less than the 57 percent increase recorded in 2011.

But traffic, and thus demand for capacity, is still on the rise, which means no one thinks ISPs will have to stop investing in their networks, and long-haul cable companies should probably still be planning their upgrades. From the release:

Nevertheless, the underlying drivers of bandwidth demand remain strong. Broadband penetration rates in developing markets remain modest, leaving substantial room for new subscriber growth. In more mature markets, where the pace of broadband subscriber growth has slowed, faster broadband speeds and the growing adoption of bandwidth-intensive applications, most notably online video, are spurring higher traffic volumes per user.

Which does mean that ISPs will continue to invest and continue to complain about that investment. What’s not in this analysis is how much it costs to add new capacity to the network on a per bit basis. Telegeography has reported that long haul bandwidth costs are dropping, and part of that is because the equipment costs less, and it’s cheaper to add new capacity to the existing networks. It also costs different amounts to upgrade different parts of the network, making the price of adding another million bits an even more difficult number to find. Adding capacity at the edge may involve a new router or it may involve laying new fiber.

Regardless, those investments must continue to be made, but greater transparency on the cost of making them would benefit policymakers and even consumers trying to understand what their love of broadband costs.

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Next Up for Netflix: Family Plans

Janko Roettgers — Mon, 18 Apr 2011 18:39:29 +0000

Netflix will introduce additional streaming plans later this year that will offer the ability to stream to multiple devices simultaneously, according to a FAQ for investors published on the company’s website. Details are still to be determined, but the offering could look like a cell phone family plan, with an option to add additional accounts at a lower price point. From the FAQ:

“One option would be to allow an account to add additional concurrent streams (using the analogy of our DVD business, it would be like choosing a higher-priced plan that allows a subscriber to have more DVDs at home)… Or it could be that there is a price point that would encourage multiple accounts in one household.”

Netflix currently allows its streaming-only customers to watch one stream at a time. Customers that have a higher-priced DVD plan can access more than one stream simultaneously. For example, if you pay to have access to three DVDs at a time, you are also able to watch three streams simultaneously.

Offering tiered streaming-only plans makes sense for multiple-family households, but it also helps Netflix to tap into additional revenue opportunities. The investor FAQ mentions the new plans as part of a larger shift toward targeting individual subscribers as opposed to households. This way of thinking opens up a much bigger market opportunity for the company: “We believe there may be an opportunity to change our focus from a household relationship to an individual relationship, since streaming is viewed on personal devices, such as phones, tablets, and laptops, as well as on shared large screen televisions,” the FAQ reads.

The phone and tablet focus especially opens up a whole new slew of additional customers. There are currently about 70 million broadband households in the U.S., but more than 300 million wireless subscriber connections – and the majority of those cell phone subscribers will own smart phones by the end of this year, according to Nielsen.

Family plans with separate profiles for each family member could also help Netflix make better use of its recommendation engine, leveraging its upcoming integration with Facebook. Netflix is reportedly working on a deep integration of the social network, making it possible to connect your Netflix and your Facebook account and share your Netflix viewing choices with your Facebook friends — something you might be more comfortable with if the questionable choices of your offspring don’t show up in your Facebook news stream.

Finally, there’s the issue of account sharing. Some members have reported in the past that they can access more than one stream even with basic plans, and we’ve heard from a few users who share accounts with their friends or extended family. Netflix hasn’t done much to crack down on this behavior, and a new family plan could actually help to convince people to go legit without adding additional restrictions that could turn off honest users.

Would you pay more to access multiple Netflix streams simultaneously and possibly have separate profiles for each family member? Let us know in the comments!

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With Broadband, Quality Should Trump Penetration

Kevin Walsh — Sat, 19 Sep 2009 18:00:29 +0000

With governments around the world spending billions of dollars trying to prop up ailing economies, many are taking advantage of this flood of stimulus money to address perceived shortcomings in broadband penetration. On the surface, this makes sense — most agree that high-speed Internet access infrastructure is a vital, high-tech equivalent to the public works projects that might have consumed such taxpayer largess in the past. But closer inspection raises questions as to whether or not “penetration” is the right metric to evaluate the health of broadband infrastructure. A case can be made that it is now time to shift our focus from promoting penetration to improving broadband quality.

Penetration is typically expressed as the percentage of people with access to broadband connections. While many can access the Internet over high-speed connections from their workplaces, libraries or coffee shops, government efforts generally focus on fixed broadband connections to residential households. The OECD recently released an update to its regular series of reports measuring the state of broadband adoption, ranking the U.S. 15th among member countries, with 25.8 connections per 100 inhabitants. Research firm broadbandtrends.com also recently issued a global study of broadband penetration, estimating that 60.2 percent of U.S. households have broadband connections. And Pew Internet conducted a survey in April that showed 63 percent of the U.S. population has broadband connections at home.

Throwing cold water on the “let’s use taxpayer money to build more broadband” argument, the Pew survey concludes that only 4 percent of U.S. adults lack broadband because they can’t get it. The balance of households decline to purchase broadband because it’s either too expensive, too complex, or they’re just not interested. So, do we really want to spend vast sums of taxpayer money extending broadband to the 4 percent of the population who may want it but can’t get it?

That’s not to say we’re done with broadband. It was always the case that broadband penetration would eventually approach 100 percent of the addressable market and, once that occurred, our priorities would need to shift. An indicator that we’re approaching this point is the tapering growth in broadband connections. As Om recently pointed out, broadband growth slowed sharply in the second quarter. Although economic factors are at play, this is also a mathematically inevitable result of growing broadband market share. As happened previously with landline and cell networks, the next wave of public and private investment in broadband infrastructure should be focused on quality.

But what does quality mean as it applies to broadband? To date, there have only been two quantifiable measures of broadband quality: speed and reliability. And if all we were doing with broadband was surfing, emailing, tweeting, and using Bing, speed and reliability would be adequate. But an increasing percentage of broadband capacity is being used to deliver streaming video directly to consumer high-definition televisions. Fully 50 percent of downstream broadband capacity will be consumed by streaming video by 2013, research firm IDC projects.

It is difficult to argue that the “best-effort” Internet is up to the job of delivering real-time streaming video that meets consumer quality expectations. These expectations are quite simple: a viewing experience indistinguishable from locally attached DVD or Blu-ray players. For this reason, just about anyone offering “professional” content (e.g., Amazon, Apple iTunes, Netflix) uses content delivery networks (CDNs) to bypass the Internet and drop traffic directly into broadband networks. CDNs are built and engineered to guarantee the service quality demanded by streaming video.

Broadband networks will need to develop similar video capabilities in order to satisfy consumer expectations. And just as with CDNs, this is not simply a speed thing. Video mean opinion scores have been used to measure the quality of video CODECs and can also be employed to measure the ability of broadband networks to deliver video quality. It is not difficult to envision broadband operators competing not on the basis of price or speed but on video (or gaming or VOIP) quality. “Can you see me now?”

Kevin Walsh has over 25 years of telecommunications and networking industry experience and is currently an executive at Zeugma Systems.

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OECD: U.S. Largest, If Not The Fastest, Broadband Market

Om Malik — Tue, 20 May 2008 14:05:55 +0000

The Organization for Economic Cooperation and Development released its report on broadband usage and penetration with some interesting findings and observations. Instead of bemoaning the problems of broadband here in the United States, how about some highlights from the 151-page report, which I hope to dig into later today:

At the end of 2007, U.S. broadband companies had 69.9 million subscribers, making it the largest OECD country by total number of subscribers, and represented 30 percent of the total OECD subscriber base.
The United States ranks 15th with a broadband density of 23.3 subscribers per 100 inhabitants.
Denmark has the highest broadband density at 35.1 percent.

Fiber-based broadband (FTTH/FTTB) is now 8 percent of the total OECD installed base, making it one of the fastest growing broadband technologies. Japan has 40 percent of its connections on fiber. Korea comes next with 34 percent.
Luxembourg is the fastest growing OECD market by per capita subscriber growth, followed by Germany and Ireland. The three countries added 5 subscribers per 100 inhabitants.
Denmark, the Netherlands, Iceland, Norway, Switzerland, Finland, Korea and Sweden all have broadband densities of more than 30 percent.
The average speed of advertised connections increased from 2 Mbit/s in 2004 to almost 9 Mbit/s in 2007 with prices coming down 16 percent for cable and 19 percent for DSL in that time frame.

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