the economics of
broadband
(a very broad view)
David Harrington
CMA
NextGen 10
Birmingham, 22-23 Nov 10
I am NOT descended from
John Maynard Keynes
J K Galbraith
Adam Smith
or Milton Friedman
But it seems to me that:
• Hosts of reasons why the large suppliers
aren't in a hurry to provide universal
service;
• Hosts of plausible excuses;
• Which are carefully listened to by
government;
• Who are strapped for cash;
• And are thus stuck between Keynes and a
hard place
excuses, excuses….
• BT doing enough to avoid charge of foot-dragging;
• yet not so much that it closes the door to public
subsidies;
• delicate balancing act - fits well with need to compete
within Virgin’s footprint;
• keeps costs and skills within bounds;
• keeps investors happy;
• enough in reserve to snap up opportunities like
Cornwall and ambush promising community projects;
• Openreach nicely positioned to become a quasimonopolistic utility.
there’s more….
• “The technology isn’t ready” (ISDN,
ADSL?)
• “There are no investors” (ISDN, ADSL?)
• “There’s no demand” (ISDN, ADSL?)
• “Demand is uncertain”: “Significant risk”:
“Financial climate unstable”
the customers’ view
• Death of linear (long, slow, lingering? ½ future
traffic on net will be HDTV to residential users)
• YouView launches first consumer product in
1H2011
• Connected TV market to reach 1Bn users by
2014
• CE manufacturers are all shipping TV's that suck
bandwidth in 2011
• HbbTV, Youview in Europe and Hybridcast in
Japan – all broadband chompers
But:
• Price of entry to ad-supported content
market: £20M initial investment
(technology). £5M opex
• Need 20M vidstreams per month to break
even (only BBC and Google at moment)
• Subs model more viable than PPV
• We have yet to integrate (T)VoD with ecommerce, product placement, red button
TV, etc.
Some questions for the
session
• Is flat-rate charging model dying?
• Is a multi-tier QoS on the ‘net inevitable?
• Will OTT suppliers have to pay for access to the
networks?
• Is community broadband scalable to achieve RoI
for content providers?
• Is the public-private balance right for the times?
• When will it become obvious that demand has got
so far ahead of supply that catch-up will mean
that FTTC becomes a legacy technology?