Rapid Growth in Next Generation Network Demand and Deployment

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Even if there is some amount of posturing by U.S. Internet service providers about gigabit access services, the push undeniably is gaining momentum.

Time Warner now says, without providing specifics, that gigabit networks will be built in its service territories in the Los Angeles market. AT&T, likewise, is considering gigabit deployments in 21 major metropolitan areas. All of that activity, one might well argue, is because of Google Fiber.

In Europe, one might make a similar observation, even if communications authorities worry that faster networks are not being deployed quickly enough. In fact, looking at growth rates, the concern might be deemed legitimate, but already a problem “being fixed”.

The latest EU report on the digital agenda, for example, shows 15 percent growth rates for next generation access, defined as services operating at a minimum of 30 Mbps. That refers to the ability of a consumer to buy such a service.

The other important point is that where such services are available, annual changes in buying are quite significant. Adoption of 30 Mbps (or faster) services are growing at a 47 percent annual rate. Adoption of services operating at a minimum of 100 Mbps are growing at an even-faster rate of 78 percent.

True, certain suppliers in some U.S. markets seem to be moving faster to supply 1-Gbps access, so one might argue the faster supply, and faster adoption of 30 Mbps and 100 Mbps speeds are not equivalent.

But neither would it be correct to say that suppliers are not providing, nor consumers adopting faster Internet access services.

Long Term Evolution availability is increasing at a 125 percent rate, even if mobile Internet adoption is growing at a slow five percent rate.

What concerns service providers is a negative revenue growth rate since 2011. Compared to 2010, 2011 revenue grew 2.2 percent, but turned negative in 2012, dropping 3.3 percent.

In 2012, U.S. service providers saw 5.1 percent revenue growth. Japan was close to flat at a revenue growth of 0.1 percent, while global revenue growth was 4.2 percent  in 2012.

In the U.S. market, mobile revenue has been rising since 2007. In the U.S. market, average revenue per user was flat between 2005 and about 2010, and has been rising since 2010. In Europe, ARPU has been declining since 2008.

The perhaps-important observation is that one always should be looking for signs of change, even in markets where investment might be considered too low, revenue is under pressure and ARPU is falling. All of that is characteristic of EU markets as a whole.

But the latest data also shows a dynamic environment, where consumer adoption of faster services is growing fast, and where the supply of faster connections also is expanding fast. 




Edited by Adam Brandt
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