Access to the Internet has become a big business for cable and telecom operators worldwide. For instance, operators like Comcast derive 17% of their quarterly revenues from high-speed Internet access for residential and business customers.*
But what trends will drive broadband in the future? Services, speed, home networking, on-demand video, digital media exchange, wireless connectivity, and network convergence are the seven key trends that will drive worldwide broadband technology and the business of broadband in the future.
Services are clearly the primary driver of operators enabled by a digital access network that can deliver various voice, video, and data services. Direct broadcast satellite (DBS), cable, and telecommunications operators focus on delivering services for TV, voice, and Internet access. Each operator will be biased toward their incumbent positions, while attempting to expand their service offerings. Expect to see a focus on "grand slam" service bundles-voice, video, data, and mobile.
Speed continues to be the primary reason to subscribe to broadband Internet access. Internet service providers have used speed to lure customers and maintain pricing. Japan's NTT and Softbank offer the fastest residential service at 24 Mbits/s. Cable, DBS, and telecom operators are laying plans for next-generation networks intended to "up the speed game" and lay the foundation for further penetration of high-definition television (HDTV) and video on demand (VOD). Expect to see increases in Internet-access speed enabled by "over the top" independent service providers for IPTV services. It's similar to what Vonage and Skype have done with Voice-over-Internet Protocol (VoIP) services.
Wireless connectivity using 802.11g technology dominates today's home networking. The race is now on to develop technologies of 500 Mbits/s or better. These will enable whole-house coverage while allowing redistribution of HD content, data. and voice throughout the home. Look for the technology that can solve the digital-rights-management (DRM) issues surrounding digital video retransmission, and thus enable a low-cost client to win this race. In the meantime, Wi-Fi networking will rule the home-networking world with security, quality-of-service, and low-cost solutions. Expect the next-generation Wi-Fi standard (802.11n) to surprise powerline and coax technologies proponents with leading range and throughput capabilities.
On-demand video, whether called VOD or digital video recorder (DVR), has just begun to permanently alter the way the world watches television. TiVo got the ball rolling when it introduced the first DVR in 1999. Operators worldwide moved quickly to offer DVR services, given the popularity with early adopters of the technology. Expect to see time-shifting and/or on-demand video on nearly every television set worldwide in the next five years.
Digital media exchange developed quickly as a driver for broadband services, with Napster gaining notoriety with the younger broadband-savvy generation. Legitimate businesses that capitalized on the potential disappearance of packed-media followed, along with the emergence of portable music players. Expect to see an equivalent video business enabled by a wiser publishing industry, availability of DRM technology for mass deployment, an advanced compression-coding (AVC/VC-1) standard, and a customer base hungry for portable video entertainment.
Mobile access is the wild-card operator, with 3G HSDPA technology allowing up to 14-Mbit/s transfer rates, rivaling cable and DSL speeds. Smart phones, with access to all corporate and home databases along with 24/7 connectivity, will significantly reduce the dependency on a PC or laptop. Expect to see smart phones, along with community keyboards and displays, dramatically outship laptops during the next few years.
Network convergence, driven primarily by the needs of cellular carriers to provide better in-home cellular coverage, will drive cellular connectivity into wire-line broadband access devices. Look for convergence of wireless and wire-line networks. In turn, these will drive the deployment of Wi-Fi and VoIP capabilities into handsets. This will yield other forms of broadband IP services deliverable to mobile devices as well.
The broadband marketplace continues to expand, with the worldwide subscriber penetration rate still many years from reaching maturity. And, competition between carriers and independent service providers delivers increasing value and choices to broadband consumers. Finally, this rapidly changing technology landscape breeds innovation by enabling new services and business models.
*Comcast Q3 2004 financial report