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CTO INDUSTRY INSIGHTS

How Will You Use Your Gig?


How Will You Use Your Gig?

The broadband industry is being pushed to support the emergence of the Gigabit Society. A potent combination of infrastructure-based competition from Fiber over-builders and cable operators is forcing traditional telcos to invest. This will become more compounded with the emergence of mm Wave Fixed Wireless Access operators, and Low Earth Orbit satellite offerings in the coming years.

The natural temptation for the industry is to continue to pursue consumers as the sole source of investment return for these Gigabit infrastructures. Many believe that by continuing to offer more and more bandwidth that they can continue to grow ARPU. Early ventures into Gigabit service delivery have shown that over the last couple of years there is a market for true gigabit access speeds, albeit currently a modest one. The market construct sees the classic low single digit percentile of the broader population, namely the “Lead Users,” are the ones adopting the highest capacities. The broader market is embracing the capability to address their pent-up demand with 100Mbps services, while remaining within the elastic spend of their monthly broadband budget.

This scenario is playing out throughout the world, from Washington to Warsaw, and is one in which network operators need to pause and think. As competition and regulation are forcing investment in Gigabit infrastructures, network operators need to ask themselves what they are going to use this Gigabit capability for. Do they leverage the bandwidth in a race to the bottom to try and lure over new subscribers, knowing that the ARPU will remain in the realm of that of 100Mbps service today? This approach may prove short-sighted as the arrival of a Gigabit-ready infrastructure will represent a 100 fold increase over what was previously available for many. Up-selling later will be impossible. Once the Gigabit genie is out of the bottle, it will be impossible to increase prices. History has proven this time and time again.

Instead, network operators need to be looking at how their investment in Gigabit-ready infrastructure can permit them to extract new sources of revenue from their networks. Rather than targeting all revenue return from the consumer, network operators need to think about how they can leverage the benefits of the latest software-defined access (SD-Access) solutions to open up new revenue streams for their businesses. With the latest SD-Access solutions, the capabilities exist to classify and modify traffic flows on a real-time basis. Under the guidance of a centralized SDN control environment, traffic types for which an SLA has been brokered by the network operator can be classified at the edge of the network and handled per the terms of that SLA.

This approach permits the end consumer to remain within their elastic spend for broadband services, while simultaneously permitting cloud-based service providers to offer products that require more bandwidth or more stringent latency and jitter controls. For this, the network operator is putting the excess capacity on the Gigabit access link to work, providing the cloud-based service users the optimal experience, without forcing them to increase their monthly broadband spend. For the cloud-based service provider, the SLA from the network operator provides the confidence that their product is being delivered reliably and consistently, ensuring that their customers are satisfied, for which they will pay the network operator. For the network operator, being able to offer peace of mind, guarantees, and consistency will prove foundational to the emergence of a whole world of new cloud-based product and service innovations that we have not yet even dreamt of - all of which the network operator has a role to play in the value stream.

How will they use their Gig? We hope it is sensibly and not squandered in a race to the bottom.