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Residential Broadband. Group A John Chuang Tushar Dani Ilin Tsai Ilya Bagrak Alexandra Fedyukova. Residential Broadband. Introduction Market and competition Technology Economics Policy and regulation Conclusion. What is Residential Broadband.

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Residential broadband
Residential Broadband

Group A

John Chuang

Tushar Dani

Ilin Tsai

Ilya Bagrak

Alexandra Fedyukova


Residential broadband

Residential Broadband

  • Introduction

  • Market and competition

  • Technology

  • Economics

  • Policy and regulation

  • Conclusion


What is residential broadband
What is Residential Broadband

  • Technologies that provide a high-bandwidth connection to the Internet for residential consumers

  • Replacement for the now fading residential dial-up technology

  • Entirely new online experience

    • Watching a video stream,

    • Downloading music in seconds,

    • Video and voice chats

    • Real-time gaming

  • This presentation is limited to US residential Broadband market


Growth and penetration
Growth and Penetration

  • Fast growth, 11% increase per year

  • Reached more than 50% penetration already across internet households

  • Several competing broadband service providers

    • Telephone companies, wireless carriers, cable TV service providers and satellite providers


Players

DSL

SBC

Verizon

Bellsouth

Quest

Cable

Comcast

Time Warner Brothers

Cox

Charter

Cablevision

Players

  • New technologies:

    • Wi-Fi (Google cloud in San Francisco, hot spots)

    • Satellite Signals

    • Wi-Max

    • BPL (broadband over power lines)


Market segments prices 1
Market segments & Prices: 1

  • Competition for Broadband subscribers is bifurcating

    • Low end emphasizing price

    • High end emphasizing speed

  • DSL companies primarily target low price segment

    • Started penetrating into high end market, Verizon’s FiOS (15 mbps)

  • Cable companies have elected to stay exclusively at the high end

  • Bundling as a way to reduce churn rate & attract new customers

    • Triple and even quadruple play



Dsl technology
DSL Technology

  • Limited distance to central office (CO)

  • Dedicated line from CO to home

  • Asymmetric flow

  • Typical speeds up to 1.5Mbits/s downstream


Cable technology
Cable Technology

  • Shared lines to the nearest splitter

  • Generally higher speeds

  • Reaches more households since distance limitation is removed

  • Typical offering 4Mbits/s

  • Last Mile advantage


Future technology
Future Technology

  • WiMax

    • Metropolitan Area Networks (MANs)

    • 3-5 miles range, no direct line of sight required

    • 2Mbits/s practical limit

    • Can use existing cell towers

  • Broadband over Power Lines (BPL)

    • More pervasive infrastructure, but requires extra equipment

    • Up to 2.7Mbits/s

    • Superimposing analog signal over AC

    • Small deployments in operation (e.g. Manassas, Virginia 10MBits/s for $30.00 a month)


Residential broadband

Porter's Five Forces Model

  • Broadband over power lines

  • Wi-Fi free internet (Google)

  • Municipal utility internet

  • Wi-Max

New entrants

  • Cable and DSL Co.

  • “cut-throat” competition

  • Trend to provide a bundle of services

  • Cable companies converging from video to telephony

  • - Cox, Comcast

  • Telecom companies converging from telephony to video

  • - SBC, Bellsouth, AOL

  • Large number of

  • equipment suppliers are available

  • e.g. Nortel, Lucent, Cisco, Nokia etc.

  • Limited companies actually own network lines, and heavily depend on network owners

  • Broadband as a Commodity.

  • Some people have 3 to 4 providers to buy from

  • Tend to buy bundled services

  • Switching costs are low, unless annual contracts

Suppliers

Buyers

Substitutes

  • TV, Music

  • Newspapers

  • Telephone etc

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)


Policy and regulation existing situation
Policy and RegulationExisting situation

  • US is 16th in the world in broadband penetration (ITU 2005 report)

  • Why is US so far behind?

    • “monopolistic structure, entrenched management, and political power of incumbents”

    • failure of effective policy and regulation for broadband industry (e.g. ,FCC regulation on spectrum allocation policy)

  • Legislative tug-of-war

    • Preserving Innovation in Telecom Act of 2005

    • Community Broadband Act of 2005


Policy and regulation
Policy and Regulation

  • Need for national broadband strategy

  • Continue to encourage highly successful open access model in Japan

    • competitors may use existing residential telephone infrastructure for a modest fee

    • competition and innovation  cheap, high-speed broadband access

  • Regulations for emerging technologies

    • FCC: better allocation of wireless spectrum

    • Municipal WiFi usage

  • Mixture of legislative, regulatory, and investment initiatives


Conclusion
Conclusion

  • Market & Players

    • Broadband will replace dial-up

    • The Battle is still pretty much between Cable and DSL companies

  • Technology

    • New technologies such as BPL, Wi-Max, Satellite are emerging, but are not great threat to existing Cable & DSL

  • Economics

    • Bundling as a way to keep existing and attract new customers

    • Segments based on Price and Speed

  • Regulation

    • Need for national broadband strategy, open access, economic incentives


Conclusion1
Conclusion

  • Cable companies have advantage due to their infrastructure and “quadruple play”

  • They will be top player in coming years

  • No winner take all conditions, Cable companies, DSL companies, and new technologies will co-exists


Residential broadband

Thank you

Clap & Questions