Gigabit Broadband: Do We Need it? Why Not?

Erik Keith

Erik Keith

Summary Bullets:

  • Gigabit broadband is getting a lot of hype and press, and for good reason. While no current applications require such throughput, offering Gigabit services, especially at reasonable and/or disruptive prices, can be a very strong differentiator for operators. Likewise, it could prove much appreciated by end users, many of which are beyond fed up with their respective telco or cable providers.
  • Credit must be given to the pioneering Gigabit service providers. In North America they include utilities, municipalities and other non-traditional service providers, such as Electric Power Board (EPB) Chattanooga (first to offer mass market Gbps in the U.S.), Bristol Virginia Utilities (BVU), CenturyLink, and of course, Google Fiber.

This week, the 2014 North American FTTH Council Conference and Expo is taking place in Fort Lauderdale, Florida. One of the hot topics is Gigabit broadband, with operators such as CenturyLink, EPB Chattanooga and GVTC all highlighting either their current Gigabit service offerings, or corresponding roadmaps for delivering 1 Gbps connections. For the record, CenturyLink is initiating Gigabit services in the Omaha, Nebraska metro, while EPB Chattanooga was the first service provider in the U.S. to offer Gigabit connections in a truly mass market fashion. For those unfamiliar with GVTC, the company founded as Guadalupe Valley Telephone Cooperative, now serves 39,000 customers in the Texas hill country near San Antonio. While Gigabit broadband access services have been available for years in some very select, overseas markets (e.g., Hong Kong Broadband Network was a pioneer and remains the global Gigabit Poster Child), this mightiest of what is termed ultra-broadband is still available to only a very small fraction of global broadband subscribers. Also, for further clarification, any reference to ultra- or Gigabit broadband refers to wireline technology, as wireless networking solutions are a very long way from being able to support such extremely high-bandwidth connections.

There is certainly a ton of hype about Gigabit broadband, much of it because of the Google Fiber initiative. While Google Fiber should be credited for sparking the interest of the average U.S. consumer in Gigabit connections, with this credit, the company must also be accountable for the actual availability of Google Fiber services. At this point, Google Fiber subscribers are still a very small fraction of the total FTTH subscriber base in the U.S. Of course, if you are one of the lucky few Google Fiber customers, getting a 1 Gbps connection for US $70/month is a true bargain in terms of cost-per-bit, especially when compared to Verizon FiOS (Verizon garners the highest average revenue per user [ARPU] of any operator, worldwide).

One of the most common questions about Gigabit broadband is, simply, Do We Need It? Of course, in the telecom networking industry, it depends who you ask. Say you are walking the exhibit floor at the FTTH Council this week, and you decide to poll the attendees. I’d say the breakdown of yes/no is 50/50, with the fiber evangelists asserting the need for speed. On the other hand, those with vested interest in “copper-heavy” networks/technology highlight the fact that copper/DSL is quite capable of supporting fiber-speed connections, more cost-effectively than a fiber network build, utilizing VDSL2+vectoring, and eventually G.Fast, as discussed here.

The answer, like many things in life, is somewhere in the middle. On one hand, virtually zero consumer applications require a 1 Gbps connection today. Say you are Google Fiber’s highest-traffic user, streaming and/or recording ten Netflix and HBO 4K streams (when available). If each stream requires 20 Mbps of throughput (with buffering, etc.), that’s still only 200 Mbps of total bandwidth required, leaving 800 Mbps of overhead. This renders the argument for 1 Gbps connections seem dramatically overblown. As Donny Janssens, Director of Fixed Network Solutions, Asia Pacific, at Alcatel-Lucent, said at last week’s CommunicASIA 2014 event in Singapore, “1 Gbps is a marketing exercise.”

While I agree, it’s also one heck of a marketing exercise. Wireline broadband speeds – as exemplified already by Hong Kong Broadband, EPB, BVU, coincidentally, all using Alcatel-Lucent’s GPON gear to deliver 1 Gbps services – and yes, Google Fiber, are quantifiable “products” that are can provide stark differentiation for service providers. And when these Gigabit services are offered in an extremely price-competitive fashion (again, by EPB and Google Fiber), they are positive, disruptive forces of change which are highly desired by end users, and sorely needed, as evidenced by the industry-worst customer service rankings of major U.S. cable operators.

About Erik Keith
As Principal Analyst for Fixed Access Infrastructure, Erik is responsible for tracking major technological, strategic and tactical developments in the wireline broadband access market. Erik's primary areas of coverage include FTTP/PON systems, DSLAMs, DLCs/MSAPs, cable access and head-end systems, as well as digital media infrastructure solutions.

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