The Future of Broadband

Daniel BallonPacific Research Institute

Broadband Summit: Connecting AmericaFCC-NARUC Joint Conference on Advanced Services

November 6, 2008

A Brief History of Broadband

Data provided by Link Hoewing/Verizon

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Access

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Innovation Drives Broadband Growth

Pew Internet, Home Broadband Adoption 2008

Innovation

DemandBroadbandInvestment

BroadbandAdoption

Investment is Limiting Factor Today

Innovation

DemandBroadbandInvestment

BroadbandAdoption

Innovation

DemandBroadbandInvestment

BroadbandAdoption

•Net neutrality debate is good news for broadband

•YouTube consumes more bandwidth today than the entire Internet in 2000

May 7, 1997: WWW = World Wide Wait

“The average Internet user in America spends 25 hours a year waiting for web sites to download.”─Former FCC Chairman William Kennard, February 8, 2000

“We confront a dynamic marketplace, characterized by rapid changes in technology, a new business alignment with every passing day, and lightening-speed changes in the flow of capital.” ─Former FCC Commissioner Susan Ness, January 20, 1999

Investment Today is Strong

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Cumulative Cable Infrastructure Investment (Billions)Total Investment in

Communications Equipment (Billions)

Jeffrey Eisenach, Broadband Policy: Does the U.S. Have it Right After All? Progress and Freedom Foundation

“We should conceptualize broadband capability as a function that can ride on many different electronic platforms. Broadband is not a copper wire. It is not a coaxial cable. It is not a wireless channel. It is all of these things. The capability can ride on many platforms (and should) in order to tailor solutions to consumer patterns and interests.” ─ Former FCC Chairman Michael Powell, October 25, 2001

“We should conceptualize broadband capability as a function that can ride on many different electronic platforms. Broadband is not a copper wire. It is not a coaxial cable. It is not a wireless channel. It is all of these things. The capability can ride on many platforms (and should) in order to tailor solutions to consumer patterns and interests.” ─ Former FCC Chairman Michael Powell, October 25, 2001

Thriving Broadband Competition

Fifth FCC Report on Advanced Telecommunications, June 12, 2008

NOTE: As of March 19, 2008, the minimum “broadband” connection speed was raised to 768 Kbps

•Only 0.1% of zip codes have no broadband providers•89% of zip codes have more than four broadband providers•23% of zip codes have more than ten broadband providers

Explosion in Bandwidth Appetite Cisco Global Internet Traffic Forecast

Informa Telecoms Mobile Forecast

New Innovations Will Drive Future Broadband Growth 1) High Definition Video-on-Demand

Requirement = 10 Mbps

Customer base for streaming HD VoD will expand 7-fold in 5 years (~30% of all households)

New Innovations Will Drive Future Broadband Growth 2) Internet TV

Source: iSuppli, May 2007

Source: Ipsos Insight, May 2008

New Innovations Will Drive Future Broadband Growth 3) Video Conferencing

Three Waves of Internet Traffic Growth

Cisco, 2008 Cisco, 2008

CNET, Inc.

1964 2008

Bell Labs

New Innovations Will Drive Future Broadband Growth 4) Telemedicine 5) Virtual Worlds

6) Online Gaming 7) Cloud Computing

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Broadband Innovation: Cable & DOCSIS 3.0 Data Over Cable Service Interface Specifications (DOCSIS)

Cable360.netLegacyDOCSIS Modem

Cable ModemTerminationSystem (CMTS)

WidebandCableModem

LegacyDOCSIS Modem

Cable ModemTerminationSystem (CMTS)

WidebandCableModem

ARRIS Group

DOCSIS Progression

DOCSIS 1.0

DOCSIS 1.1

DOCSIS 2.0

DOCSIS 3.0

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Broadband Innovation: Cable & DOCSIS 3.0

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Cable Industry Infrastructure Expenditures

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Source: NCTA

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Cable Broadband Availability

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Broadband Innovation: FTTx

VerizonFiOS

AT&TU-Verse

BPONDownstream: 622 MbpsUpstream: 155 Mbps

GPONDownstream: 2.5 GbpsUpstream: 1.5 Gbps

Downstream: 25-37 MbpsUpstream: 6 Mbps

Broadband Innovation: FTTx

Verizon FiOS Customers (Million)

Verizon RVA Research

FTTH Penetration

AT&T U-verse FTTN

AT&T

Broadband Innovation: 4G Wireless Networks

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2G

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4G

Evolution of Wireless Technologies

Data Transmission Speeds (Mbps)

50 Mbps-1 Gbps60 Kbps-54 Mbps

20 Kbps-171 Kbps

10 Kbps-40 Kbps1995

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2010

Orthogonal Frequency-Division Multiplexing

IEC

WiMAX Backers LTE Backers

Broadband Innovation: 4G Wireless Networks

Broadband Innovation: Satellite Internet?

The Kizuna Satellite

O3b Networks

Conclusions

•The future of broadband looks bright

•Abundant innovation in both content and delivery

•The U.S. is leading the way in many future technologies

•Multiple technologies in direct competition

•Important not to give unfair advantages through inconsistent regulation

•Important not to pick winners through subsidies