Both fixed and mobile broadband networks face a long-term crisis of profitability. This is due to a structural misalignment between demand and supply. Understanding how to resolve this misalignment offers a huge business opportunity for both communications services providers and their suppliers.
Broadband service must enable perceived benefits that exceed their costs
Demand for broadband is driven by both Moore’s Law as well as the ingenuity of people to conjure new applications. That demand is highly diverse: applications have a wide range of quality and quantity needs; some users and applications are more important than others; and individual users vary in their willingness to pay for dependability. Regardless of this complexity, one truth holds everywhere: users will only pay for a broadband service when it enables fit-for-purpose application outcomes whose benefits exceed their costs.
Bandwidth does not equal fitness-for-purpose
With respect to supply, meanwhile, the broadband industry is fixated on ‘bandwidth’. However, bandwidth is an increasingly poor proxy for fitness-for-purpose, since it fails to embody the quality needs of applications. Furthermore, the structure of supply does not reflect the diversity of performance and cost needs. Indeed, the unthinking pursuit of peak transfer speeds is ultimately detrimental to both user experience and rational economics. As a result, there is a disconnect between demand and supply.
Something has to change
The broadband industry is therefore one whose costs and revenues are out of balance. It has unwittingly brought itself into conflict with the mathematical constraints of packet-based statistical multiplexing. Worse, it is unable to create the kinds of supply chains necessary to support the emerging cloud services economy. The unpalatable outcome is that it is fundamentally unsustainable in its current form. According to PwC, the telecoms industry has not, in aggregate, covered its cost of capital for a single year this century. Something has to change.
The solution to these economic and technical issues is to return to fundamentals, and to re-align demand and supply by correctly measuring, modelling and managing network operation.
Get in touch
We can help you bring your broadband business onto a sustainable basis. We have the leading-edge tools and methods necessary to construct broadband business models that are sustainable, on top of infrastructure that is highly performance and economic to run. You are warmly encouraged to get in touch to learn more and to set up a conversation about how we can help you.
Read It Now
