The case of Slouching Toward

BroadbandRevisited in 2005

Group : BT2C

Contains

• Introduction

•Flavors of broadband•Broadband Over Cable TV Lines•Broadband Over Phone Lines•Satellite

•Coming attractions•Broadband Over Powerlines (BPL)•WiFi•Fiber

Contains

•An ISP looks at broadband

•YAHOO! And its Allies

•Regulatory issues

•The importance of broadband•Big bucks form broadband,but for Whom•A national imperative?

•Conclusion

Introduction

• Americans consumed were “supersized”.

• Most Americans sipped the Web through slow dial-up connections.

• There were many reasons for the slower-than-expected adoption of broadband in the United States.

• Many other countries were making broadband penetration a national priority,and their citizens were fast becoming more wired than those in the United States.

Worldwide Broadband Penetration by Country

Worldwide Broadband Penetration by Country

Introduction

• By early 2005 the penetration of broadband had improved in the United States, to the point where around half of residential users accessed the Internet via broadband

• A form of broadband known as digital subscriber line (DSL) was offered by established telephone companies and smaller companies competing with them.

• A different form of broadband was offered by cable television service providers.

Introduction

• In the late 1990s,cable companies pushed ahead in investing upwards of $100 billion over eight years to upgrade their networks.

• RBOCs held off investing much in their networks, and instead lobbied Congress to roll back various provisions of the 1996 Act.

• DSL penetration continued to lag cable penetration in the United States and Canada, making North America the only region in the world where cable was the broadband leader.

Introduction

• RBOCs was the fact that their core business, providing local phone service via the public switch telephone network, was shrinking fast.

• Through high-speed Internet access, either RBOCs or cable companies could provide this triple play, a market estimated to exceed $134 billion in 2004.

• By the end of 2004, new technologies and infrastructure were emerging that promised to upset the balance between DSL and cable and consumers more choices for broadband access.

Flavors of broadband

• There were several methods currently available to deliver broadband to homes.

• In1999,84 % of consumer broadband subscribers used cable versus 16% with DSL.

• By the end of 2000, cable slipped to 55% versus 45% with DSL

• By June 2001, cable edge out DSL by 51% to 49%

• By the middle of 2004, DSL had far outpaced cable in most regions around the world.

Broadband over cable TV lines

• A cable television service provider is a company that lays and service coaxial cable and presents programming.

• The same coaxial cable that runs into each cable subscribers’ home is capable of delivering broadband Internet access as well as telephone service.

Broadband over cable TV lines

To access the Internet• A cable modem

• A device that attaches to the cable just like a TV converter box

Broadband over cable TV lines In the late 1980s, many cable companies began upgrading their networks with high capacity fiber optics.

High capacity fiber optics• connected the l facility cable operator’s central facility to each neighborhood area

• The data channel was shared among the homes linked by coax to the end of the local fiber-optic line.

• The actual data rate achieved in any individual home depended on the number of users sharing the channel at a given time.

• download speeds 1 Mbs.

• upload speeds 200 Kbp.

Broadband over cable phone lines • By 2004, most broadband over telephone lines used a variety of DSL.

• In the United States,DSL service was provided by Incumbent Local Exchange Carriers(ILECs) and Competitive Local Exchange Carriers(CLECs).

• There were several ways available to transmit data at high rates over the twisted air of copper wires.

Broadband over cable phone lines

• DSL services could be provided to homes within a 4-5 kilometer radius from the telecommunication exchange or central office.

• The most widely deployed version was asymmetric DSL,or ADSL • download speeds under 1 Mbs. , upload speeds 200 Kbp.

Satellite • For customers not offered broadband services by cable companies or ILECs.

• Satellite and wireless broadband Internet access to consumers.

• By early 2002,DirecPC and StarBand used geostationary satellites that orbit the earth 36,000 kilometers(22,000 miles) above the equator at the same speed as the earth’s rotation to communicate with fixed-orientation dish antennas attached to customers’ homes.

• As with satellite TV,trees and heavy rains could affect reception of the Internet signals.

Coming attractions

• Most newer broadband technologies required new infrastructure.

•The advantages in terms of transmission could make them worthwhile.

Broadband over powerlines (BPL)

• This technology employed the electric wires already bringing electricity to homes to carry high-speed Internet access.

• Powerlines were already in place and reached more homes than either cable systems or even telephone lines.

• It also held the hope of using the electric wires that girded homes and turning them into wired local area networks(LANs).

• In late 2004 BPL was still considered unreliable and very expensive.

• There were many hurdles for the technology to overcome.

Wifi: A potential hot spot for broadband

• This networking protocal(standard) governed wireless local area networks that could transfer data at speed of up to 11 Mbs., faster than the less 1Mbs. That DSL provided, and far faster than the 144Kbs. data transmission rates that 3G mobile service providers planned.

• Users communicated with WiFi transmitters or base stations, known as “hot spots,” via small antennas connected to devices such as desktop or laptop computers and personal digital assistants.

• Providers emerged offering subscription-based WiFi broadband Internet access via a growing network of hotels, coffee shops, airports and other facilities.

Wifi: A potential hot spot for broadband

• The drawback to WiFi was its very limited coverage area.

•By 2004, some cities were considering creating a series of municipal hot spots to provide their residents free or low-cost wireless broadband access via WiFi.

• One worry was that a newer wireless technology, such as WiMax, which transmit broadband access signals 30 miles instead of the 300 feet range of WiFi.

WiMax

• high-speed, low-cost wireless last mile

• Consumer could surf the Web at high speeds via wireless transmission between distant WiMax broadcast equipment and a WiFi base station or modem in their homes.

• WiMax would be high-speed Internet access to rural consumers who were by passed by DSL and cable services.

• There were big roadblocks on the part to a WiMax world.

• technology and services were better proven

• Mobile WiMax required a narrower spectrum than WiMax and worked in moving cars and trains, which WiMax would not.

Fiber (Fiber-to-the-X,FTTx)

• This was a technology that particularly interested the RBOCs.

• With fiber, RBOCs could offer extremely high-speed Internet access, telephone service, video-on-demand, and even high-definition television service.

• Fiber-to-the-curb

• cost around $300 per household to install

• speed of around 25 Mbs.

• Fiber-to-the-home

• cost around $800 per household

to install

• speed of around 25 Mbs.

An ISP looks at broadband

• Internet service providers (ISPs)

• By the end of 2004,most of these ISPs consolidated or were driven out of business.

•One large independent ISP remained: EarthLink.

An ISP looks at broadband

• Founded in 1994, EarthLink was the third largest ISP in the U.S.

• By the end of 2004, EarthLink had 5.5 million subscribers.• about $1.4 billion in annual revenue

• provided Internet dial-up(narrowband), broadband access via DSL, cable, Web site hosting, Internet advertising, domain name registration and e-mail.

• 62% of total revenue from narrowband access fees

• 32% from broadband access fees

• 6% from Web hosting and advertising • The company had roughly 7% of the total market by the end of 2004.

An ISP looks at broadband

• Almost 90% of the market was controlled by and other large players such as cable MSOs and RBOCs

• EarthLink’s customers or dealt directly with EarthLink, which in turn leased access lines from ILECs or cable companies.

• Broadband access was a big problem for EarthLink.

• EarthLink pays between $125 million and $150 million each year each year for access to the four largest ILECs.But that figure is still too small to get their attention. They continue to make decisions about pricing without consulting EarthLink.

• EarthLink now had access throughout the Time Warner cable system.

• more success, easier and cheaper

An ISP looks at broadband

• For EarthLink, the richer surfing experience provided by broadband helped spur demand for the company’s additional value-added service.

•To make money, EarthLink had to price its service $10-$15 over the lowest price offered by ILECs or cable companies.

•To keep customers paying this premium, EarthLink offered around-the-clock customer support and a host of value-added services.

YAHOO! and its allies

• Three years ago, the company embarked on an alliance with RBOC SBC to provide co-branded DSL access to customers.

• The idea was to lend the cachet of the Yahoo! brand to the RBOC, while took care of provisioning and maintaining the physical network and billing customers.

• Broadband offered crucial avenues of growth to both companies.

• It enables to offer more robust features, such as video services, and other premium services.

• Broadband was being used as a centerpiece of a multiservice strategy for both RBOCs and cable companies.

• value-added services which integrate across networks will become crucial as a point of differentiation

YAHOO! and its allies

• Yahoo! Bundles some premium services to end users at no extra charge.

•The financial value to Yahoo! was in the monthly subscriber fee.

•Yahoo! Found that broadband alliance usuers were more engaged with other Yahoo! Services.

Regulatory issues

• Under the 1996 Act, RBOCs were required to share their central office facilities with competitive telecommunications service providers

• In the wake of the 1996 Act, RBOCs focused on defending themselves against competition from CLECs.

• The cable industry, which was not regurated as a common carrier, escaped many of the changes the RBOCs found most onerous.

• Cable company, which had monopolies in theirs regions , spent heavily to upgrade their networks to offer video-on-demand and voice telephony as well as broadband.

Regulatory issues

• Broadband, along with Voice Over Internet Protocol(VoIP), coexisted awkwardly with the Internet, access to which straddled two highly regulated industries, cable companies and RBOCs, which themselves were undergoing fundamental regulatory and technological changes.

• In 2004, long distance carriers MCI, Sprint and wrote down a total of $19 billion of phone assets.

• The RABOC’s revenue from local phone services declined by $15 billion between 2001 and 2004, falling 7% a year.

Regulatory issues

• In late 2004, RBOCs received a victory from the FCC which decided not to force the Bells to share(unbundle) their new fiber networks with rivals on regulated terms and conditions.

• A majority of FCC commissioners found that consumers would benefit by making RBOCs more vigorous competitors to cable companies, which play “a significant role in the current broadband market.”

The importance of broadband

Big Bucks from Broadband, but for Whom• Many economists pointed to networking as the crucial link between increased IT performance and productivity gains.

• Others pointed to broadband as an important potential catalyst for general economic growth in the United States.

• The study found consumers would benefit from enhanced online home shopping and entertainment services as well as from a variety of additional services.

• People with high-speed access searched for information and made purchases online at approximately double the rate of those with lower-speed analog modems.

• From 1996 to 2001, the average hours of Internet use per person soared in the United States.

The importance of broadband

A National Imperative?

• TechNet, and prominent technology industry leaders, have framed the issue of consumer broadband penetration as a matter of national strategic importance.

• Regulatory policies should encourage all companies to deploy these expensive and risky facilities.

• asking the government to offer tax credits to help companies defray the costs of bringing broadband to poor and rural areas, and exempting new RBOC broadband investments from federal regulation

Conclusion

• Most Americans who purchased broadband access would use cable or DSL

• At the same time, like continents formerly separated by an ocean, the cable and ILEC industries were undergoing seismic shifts that brought them closer together.

• The regulatory regimes that governed these industries were not keeping up with these changes.

• Neither the cable industry nor the ILEC industry seemed to be developing business models that would fully exploit the fundamental changes that were taking place.

• Until broadband became ubiquitous, the service triple play would remain out of reach for everybody.

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