We are entering the gigabit era in broadband. This jump represents an increase of 100 times over the current US average and is realistically within five years of deployment in North America.
While there is "hundredth-monkey effect" speculation about the cause, there is no doubt that Google (Nasdaq: GOOG)'s 1 Gbit/s fiber network in Kansas City and Austin tumbled the first domino. CenturyLink Inc. (NYSE: CTL) has delivered gigabit services to Omaha, and AT&T Inc. (NYSE: T) has announced it will also bring 1 Gbit/s to Austin.
Google's role in the gigabit tipping point should not be understated. Broadband rollout friction is primarily the result of higher costs in North America. The costs of network plant trend higher than in other countries because such a small percentage of the population lives in high-rise urban apartments, where tremendous efficiencies in the number of switches and repeaters to cover subscribers can be achieved.
Instead carriers must maintain a massive network of outdoor wiring that's exposed to the weather and is millions of miles long. Google limited the geographic scope of offerings in the terms and conditions, and only focused on profitable neighborhoods [so-called "fiberhoods"]. The result was a much more cost efficient rollout. Similar terms will benefit other carriers and accelerate the availability of gigabit services.
It is important to specify that we are talking about FTTH solutions, implying an overlay of the copper plant. But there is an alternative: G.fast vectoring, which can theoretically achieve 1 Gbit/s, has been proposed as a more cost-effective solution. It re-uses the final few meters of existing copper to the home. This deployment relies on a fiber to the distribution point [FTTdp] infrastructure. The cost-reduction of G.fast with FTTdp is primarily driven by not entering the subscriber home.
The second wave of gigabit access will take place with the cable providers. Already more than 80 percent of the cable installed base has DOCSIS 3 and DOCSIS 3.1, which can achieve 320 Mbit/s and theoretically up to 1 Gbit/s with channel bonding, which will be the next phase of deployment.
There has traditionally been a performance gap between wireline and wireless access. However, this may be about to change. While LTE is still fresh out of the box, several carriers have announced commercial LTE-Advanced (LTE-A) networks, such as SK Telecom (Nasdaq: SKM) in South Korea and Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) in Australia. (See SKT's LTE-Advanced Subs Growing Fast and Ericsson Boasts LTE-Advanced Breakthrough.)
LTE-A can theoretically support bandwidths up to 1 Gbit/s by aggregating up to five 20-MHz component carriers. These initial deployments, however, are limited to speeds in the 150-300 Mbit/s range. It is expected that we will see LTE-A networks hit North America before the first half of 2014.
More than video and cloud
Beyond forecast models, what could you actually do with a 1 Gbit/s connection? Earlier this year, KC Digital Drive hosted a "Hacking the Gigabit City" event to explore apps that would take advantage of gigabit speeds. The dominant theme involved the delivery of cloud-based services. For instance, business software, such as CRM, Microsoft Office tools, and backup and recovery solutions could be made available through a single click.
Video was also a dominant theme, with interactive Massively Open Online Courses (MOOCs) and Tele-Health applications leading the discussion.
While video and cloud data services represent elephant-class services, however, the second opportunity for gigabit is the scale of mouse-class services. Larger pipes enable orders of magnitude: more sessions to Internet services such as newsfeeds or wellness applications, not to mention pictures of cats…
NPD Group Inc. estimates that by 2022 the average household with two teenage children will own roughly 50 Internet-connected devices. This increases the multiplier of sessions by a factor of 50 -- where each device could be running hundreds of sessions, feeding data to multiple Web-connected engines. The effect will be to make the Internet recede into the background, blurring the line between the digital and brick worlds.
It is important to clarify that a 1 Gbit/s access connection does not guarantee high-speed delivery. For instance, Google's Kansas City network delivers Netflix streaming video at an average rate of 2.55 Mbit/s, despite the gigabit access speed. The service delivery rate is governed by other Internet bottlenecks. Therefore, gigabit access will require upstream investments in the infrastructure for its full potential to be realized.
It seems that before the future even has had a chance to experiment with 100 Mbit/s, we have been thrown into a 1 Gbit/s world. The diminishing gap between wireline and wireless speeds will accelerate penetration and shape consumption of gigabit-class services faster than we may expect. Are you ready for the tipping point?
-- Vish Nandlall, Head of Strategy, Marketing, and CTO, Ericsson North America