The Boy Who Cried ‘Speed’
The year is a post-apocalyptic 2049. Nvidia, after completing its purchase of Microsoft, is out of tech to buy. They set their sights on the last remaining company, Taco Bell…
A dystopian future? Maybe. Likely? Probably not, but still in the realm of possibility. Then again, who would have predicted that the telecom industry would be in the current state of confusion where it currently finds itself?
I have been writing recently about the belief that customers only care about speed. The cable industry created the monster when they were capable of winning at speed wars. Unfortunately, the tide has turned, as it so often does, but there are those in the industry who hold out hope that customers want more speed, even though available evidence is to the contrary.
They obviously did not read Jeff’s rule #50, which states:
“Customers buy speed once, they buy services every day.”
While some customers care about speed, with Wi-Fi being the great leveler (Jeff’s rule #35), line rate above Wi-Fi speeds is unused. A 1 Gbps symmetrical connection has a certain je ne sais quoi, but when every device is connected via a Wi-Fi 5 gateway only capable of 300 Mbps or so, the remaining 700 Mbps is meaningless unless there are wired devices not using Wi-Fi. Which means for most customers they are paying for speeds they will never use.
Based on technology discussions with friends and family, the topic of speed rarely comes up. Almost no one I spoke with even knew their actual speed tier. What they did know was when outages happened and how long they lasted, when their last price increase was, and how annoyed they were by having to call in every year to get the same or similar deal as the previous year.
It pays to listen to the customer more than as a checkbox on a form.
What is happening to the bandwidth CAGR and why?
I have spent time pondering what happened to bandwidth growth and how things have changed. There are some important facts to keep in mind as we adapt to changes in how customers use our services.
The CAGR has changed over the past 2+ decades. Roughly speaking:
2000-2009: 40%
2010-2019: 30%
2020-present: 10%
2030-2040: 0% prediction
The following list is a collection of ideas I have been looking into and how they impact the Internet service provider industry. Whether you agree with my observations or conclusions, this list is an attempt to definitively look at why things are changing. Give them a read and let me know of any suggestions to improve things.
Key points in bandwidth futures
- Bandwidth Growth Stagnation: Terrestrial and mobile data growth is slowing down and expected to peak below 1 Gbps.
- Impact on Telecom Research: The slowing growth challenges the assumption of endless bandwidth demand, which has been a key driver of telecom research funding. No more 40% CAGR means the current excess capacity will last a long time.
- Consumer Application Bandwidth Needs: Mainstream consumer applications rarely require more than 100 Mbps, with most needing less than 20 Mbps.
- Bandwidth Demand Saturation: Consumer demand for bandwidth might reach a saturation point, similar to the saturation of airspeed in commercial air travel. Fast enough is just that.
- Niche Applications: While niche applications might still benefit from extremely high bandwidth, the majority of consumer demand will most likely resemble current 5G usage.
- Bandwidth Perception: Increases in bandwidth beyond a certain point might not translate to noticeable improvements in user experience, similar to the negligible difference between 4G and 5G for some users. I call this “The Gigabit Plateau.”
- Bandwidth Saturation Point: For most use cases, bandwidth beyond 100 Mbps to 1 Gbps yields diminishing returns in noticeable improvements.
- High Bandwidth Use Case: Even the most demanding applications require less than 100 Mbps, highlighting the current bandwidth excess landscape.
- Future Bandwidth Demand: While future technologies like AI-powered features in smartphones might emerge, their immediate bandwidth requirements are unlikely to saturate current capacities.
- Autonomous Vehicles’ Network Needs: Do not require instantaneous Internet communication and are expected to be met by 5G.
- IoT Network Demands: Not expected to exceed the capacity of a decent 4G connection.
- Holographic Communication Bandwidth: Similar to stereographic video projections, requiring bandwidth comparable to multiple 4k video streams.
- Bandwidth Demand: No new technology has emerged that demands network requirements much beyond what 4G and 5G already deliver.
- Future-Proofing Telecom: Future-proofing telecom in the anticipation of tens or more Gbps of consumer bandwidth demand seems like expensive insurance against an improbable event.
- Bandwidth Usage Growth: The rate of bandwidth growth is slowing, although overall bandwidth usage is not declining.
- Mobile Data Usage Growth: Declining by 6% annually between 2015 and 2025.
- Landline Data Usage Growth: Declining by 3% annually between 2015 and 2025, excluding the COVID-19 anomaly in 2020 and 2021.
- Telecom Industry Impact: 5G and terrestrial broadband networks meet most consumer needs, leading to a decrease in data usage growth.
- Data Growth Trend: Data growth is expected to reach zero or a negligible amount by 2030.
- Telecom Industry Forecast: The need for faster and bigger networks may be overplayed, potentially impacting equipment suppliers and operators.
- Operator Spending: Operators are investing less in DOCSIS 4.0 and 5G equipment, and are likely approaching maintenance-only spending.
- Telecommunication Industry Trend: Shifting from high-growth to a more stable model, similar to public utilities, focusing on reliable data connectivity.
- Bandwidth Expansion: While some expansion is necessary, the demand for extremely high speeds (e.g., 10 Gbps+) is not currently supported by consumer needs.
- Telecom Companies’ Future: Many face restructuring and cost-cutting measures, with competition shifting from technological innovation to price and customer service.
- Policy Shift: Shift from focusing on metrics like 5G and cable deployment to metrics like homes with sufficient connectivity and mobile coverage.
- Coverage Improvement: Research on widening coverage in underserved areas with cost-effective and environmentally friendly solutions.
- Digital Divide Solutions: Regulatory support through government funding and technological advancements like satellite Internet and improved indoor coverage.
- 6G Focus: Lower prices and increased reliability.
- 6G Potential: Adjustment period with opportunities for those understanding the end of rapid bandwidth growth.
- 6G Impact: May not be a bold push for higher speeds but a shift in focus.
All of which leads me to a singular and unpopular recommendation: Cable TV does not need to do another upgrade cycle unless there is an external force acting upon it requiring that additional bandwidth.
Given the state of the industry as we know it today, that external force has not yet shown itself.
DOCSIS 3.1 and DOCSIS 3.1+ will provide more than enough bandwidth to support the industry for the next 15 to 20 years. While DOCSIS 4.0 is an aspirational next step, until such time as when applications or competition forces cable’s hand, customers would be much better served by spending the available funds on replacing aging components to achieve better network reliability and resiliency.
The bottom line is that with high-split DOCSIS 3.1 and 3.1+, there is more than sufficient capacity to give every customer 1 Gbps downstream and 1 Gbps upstream. Yes, there will need to be some plant upgrades, but there will always need to be some plant upgrades. Nothing out of the norm. If any future upgrades are needed, the only logical path forward is fiber, as we know the only way to compete with fiber is with fiber. I said it 20+ years ago and it still holds true.
If you do believe you have to upgrade to DOCSIS 4.0 or beyond, give my list another read and think about it more. You may decide to spend those funds elsewhere, for now at least. Let me know why you think it is necessary as I may have missed something bloody obvious.
Feel free to contact me (email:jlfinkels@gmail.com) if you are interested in discussing things further.
Until next time…
Jeff Finkelstein,
jlfinkels@gmail.com
Prior to retirement, Jeff Finkelstein was the Chief Access Scientist for Cox Communications in Atlanta, Georgia. He has been a key contributor to engineering at Cox since 2002 and is an innovator of advanced technologies including proactive network maintenance, active queue management, flexible MAC architecture, DOCSIS 3.1, and DOCSIS 4.0. His responsibilities included defining the future cable network vision and teaching innovation at Cox. Jeff has over 50 patents issued or pending. He is also a long-time member of the SCTE Chattahoochee Chapter and member of the Cable TV Pioneers class of 2022.
—
Images, Shutterstock
