High-speed FBB: focus on niches, not speed

Serene Chan/Frost & Sullivan
19 Jun 2013
00:00

One of the common traits that the internet has developed in people is the need to do things faster than before. With the rise of multimedia content in a Web 2.0 environment, the need for high-speed connectivity becomes inevitable. With mounting pressure for connectivity and speed, fiber broadband appears to be the only future-proof solution.

The deployment of optical fiber has proved to be an expensive and daunting task for fixed broadband players. Those in Singapore and Hong Kong met challenges in obtaining approval and access to multiple dwelling units to install their fiber lines, resulting in delays in laying the last-mile connections to buildings. In Australia, network providers face a vast landscape to be covered coupled with laying the last mile to standalone residential lots.

With all that done in the name of “speed,” the irony is that consumers are not willing to pay more. As reports such as Akamai’s latest State of the Internet Report indicate that average connection speeds continue to rise for the developed APAC countries, an interesting question is whether consumers are using 1Gbps for activities that are different from what they did previously with significantly lower broadband speed. Given that service providers are selling more bandwidth access over value-added services, the answer becomes obvious.

Underutilization of such an expensive and supposedly transformational infrastructure has made the proponents of the national broadband network vulnerable to public criticism. Do consumers need 1Gbps? What do consumers want to do with that speed? Are consumers prepared to pay more for speed?

At this juncture, an important consideration is whether the fiber broadband infrastructure is really built to support the needs of today. Internet usage trends have shown that what consumers want to do today is no longer indicative of what they require the day after tomorrow, which is why the fiber broadband infrastructure is built to support usage in the next 20 years.

Many people today remain unconvinced on how fiber broadband would ever make a big impact to their lives. The prospects of transformation and greater accessibility seem irrelevant and impractical.

What this tells us is not just simply a need to create awareness. More importantly, service providers have to accept that the fixed broadband market is not homogeneous - the demand for the various types of services ranging from connected health to education will be fragmented based on individual demographics and lifestyle requirements. The market has to be segmented for pockets of revenue streams rather than the usual scale of returns that service providers have been used to.

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