Gigabit broadband: speed for speed’s sake?

At this year's Broadband World Forum (BBWF 2016), there was a lot of lively discussion about Gigabit broadband: the drivers, technology choices, money-making opportunities and the impact on home networks.

Gigabit broadband has already been deployed in some countries, and Ovum expects the number of deployments to continue to increase in 2017. In some developed markets, including Singapore, Ovum expects that by 2020, gigabit broadband will account for more than 65% of all broadband lines.

Big questions around making money remain

There is no doubt that fixed broadband bandwidth is increasing. According to Ovum's latest consumer forecast, by 2021, 20% of broadband users worldwide will have broadband speeds of at least 100Mbps or higher. At the same time, demand for speeds below 10Mbps will fall from less than 50% in 2014 to less than 10%, while 30Mbps+ broadband services will account for 55% of all lines. This result will be driven by a number of factors:

• The growing demand for online media such as videos and games;
• Growing demand for high-definition video content and services;
• Larger TV screens (from an average of 40-45 inches today to an average of over 60 inches by 2020);
• More video-capable screens (one operator predicts an average of six video-viewing screens per home by 2020);
• An increasing number of connected devices (from an average of 10 today to 50+ by 2020).

However, there is still debate about whether there is a real need for 1Gbps or higher speeds. Equipment manufacturers certainly like to think so, but service providers contacted by Ovum are not so sure. Everyone agrees that speed is definitely a factor in the high-quality experience that consumers value, but most also admit that we don't need gigabit services to provide a high-quality experience for current services and applications.

Therefore, the main driver for Gigabit speeds right now is speed for speed’s sake. At least two service providers contacted by Ovum at BBWF 2016 admitted that one of the top adoption drivers they saw for Gigabit services was “speed testing” (i.e. someone doing an online speed test and sharing the results on social media). Speed ​​testing may sound trivial, but because consumers equate high broadband speeds with a high quality experience, posting speed test results on social media is like giving service providers some free marketing.

The focus is still on speed rather than true QoE

Ovum's research shows that latency is a more important part of overall QoE than speed, but speed was still the most discussed topic at BBWF 2016. However, at least one (European) service provider that Ovum has learned of emphasized at the conference that in its R&D testing, the company found that increasing speeds above 100Mbps did not help QoE much. As a result, it turned its focus to technologies that further reduce latency, which has a more positive impact on low-latency applications (such as online gaming).

In Ovum's view, this is a smart move, although operators still face challenges in communicating the benefits of low latency to consumers, as this is more difficult to market than promoting increased speed. However, "latency" is a well-known term among online gamers, so low latency can be a powerful marketing tool in this market segment.

The connected home isn't ready for gigabit broadband

Michael Philpott, Ovum consumer services business leader, said that in order to provide high QoE, the entire end-to-end connection must be considered. Broadband service providers certainly cannot say: "Our responsibility ends at the perimeter of the home (network). They must invest more in the home network to fully utilize the QoE differentiation. It is gratifying that Ovum has seen at BBWF 2016 that the industry is paying more and more attention to the role of the home network in helping to achieve the best QoE. This focus is not limited to high-speed media streaming, but also includes smart home devices and applications.

From choosing the right wireless network standard to selecting device middleware, the key message from vendors is that investment in home networking is necessary if service providers want to maintain good working relationships with their customers and survive in an increasingly competitive market. Ovum said it is encouraging to see some real innovation at BBWF 2016 that will enable service providers to offer consumers the best products.