Deloitte Global predicts for 2016 that the number of Gbit/s internet subscriptions on the globe will surge to 10 million by the year-end, a ten-fold increase, of which about 70% will be residential connections. Looking further ahead, by 2020 this increases to 600 million subscribers, 5 to 10 percent of all broadband connections. Of these, about 90% would be residential, and the rest for business.
As faster speeds become available, the range of applications using higher bandwidth increase and the number of screens/devices per person steady rises. The Media Research Group points at the explosion of the number of connected devices per broadband household: from only 1 – the laptop – in 2000, 6,3 in 2010 to 10 in 2015. Depending on the consultancy firm the Internet of Things will boost this to 25, 30 or more in 2020.
Also small businesses have experienced a significant increase in bandwidth demand, with the move to cloud-based services for a growing range of applications as key driver.
The logic in the Gbit/s race refers to:
Only a limited number of technologies are likely to be capable of Gbit/s: Fiber to the Home (FTTH) or Fiber to the Premise (FTTP) based on fiber technology and DOCSIS to speed-up cable broadband networks.
Mobile is eating the world
In a similar way the capacity of mobile networks rapidly expands, bringing more bandwidth to the end-user, more and more only connected through through “mobile devices eating the World”. The pace of the development of “mobile” is without precedence.
The race is on to set 5G standards for fifth-generation wireless technology, where it was a major topic at Mobile World Congress in Barcelona, where telecom equipment manufacturers including Samsung, Ericsson and Nokia are featuring 5G demonstrations. Many carriers and equipment providers also have been collaborating in university settings to be able to offer 5G wireless Internet speeds more than 100 times faster than anything available now. It is held to be ideal to support bandwidth-hungry applications around video, virtual and augmented reality and the internet of things (IoT), because it will support many radio interfaces and use radio spectrum much more efficient.
Telecoms and mobile operator AT&T has announced a 5G mobile network roadmap. It said it will conduct field trials of 5G technologies to provide wireless connectivity to fixed locations before the year is out.
The operator said it would embark on a laboratory-based collaboration with Ericsson and Intel to work on 5G systems this spring. In Ausin, Texas, it will perform outdoor tests and trials to take place over the summer.
As average data connections get faster, services become more bandwidth consumptive. New today unviable data-intensive services will emerge and new ‘data-gulping’ devices pop up.
In addition to the bandwidth usage triggered by human activity, the volume of background data usage grows. Every device is likely to require online updates on apps or operating system. And then there is the expected growth of the Internet of Things to add to network stress.
Capacity, reach, and capability
The primary motivation is to increase network capacity and extend the reach of voice services:
In the DNA in the telecommunication industry economies of scale are dominant. It is a fact that the telecom spend in value chains decreases in value chains in many industries. Connectivity is growing at a lower rate then other parts of the value chain. Carriers are forced to beat the drums of efficiency and economies of scale (McKinsey/Datastream) and that's what they do.
Rupert Wood draws the bigger picture. In developed markets, mobile networks do not have anything like enough capacity or quality for many consumers seriously to consider switching all their data consumption to mobile. As long as fixed broadband represents better value for money, consumers will tend to cut the use of mobile data. Converged operators enjoy this phenomenon because any increased usage of data, including mobile data, actually reinforces the value of the fixed broadband connection.
The many transactions in the last 18 months have changed the telecom landscape in Europe. In particular, mobile operators merge to improve their market position and generate synergies.
Combinations of mobile and fixed operators create the ability to generate economies of scale on the network side and economies of scope in the service delivery
It is most unlikely that the speed race stops at the 1 Gbit/s milestone. In 2015 Salisbury (North Carolina) is the first city to offer a 10 Gbit/s connection to its citizens, elsewhere the industry contemplates 50 Gbit/s connections. Internet speeds will continue to rise in the long term.
Author: Pieter van Hoogstraten