broadband stimulus: paying for net neutrality?
TRANSCRIPT
Broadband Stimulus:Paying for Net Neutrality?
Mike Jude, Program Manager
Consumer Communication Services
October 13, 2009
2
Focus Points
• Consumer Communication Services
• The Growth of Broadband Access
• Broadband Stimulus
• Net Neutrality
• Combining the Influences
• Implications for Carriers and Operators
• Conclusions
3
Consumer Communication Services
4
Consumer Communication Services
•The Consumer Communication Services (CCS) practice is focused on understanding the dynamics of communication service consumption by the residential consumer.
•CCS looks at three essential layers in the service delivery continuum:
•Services•Consumer preferences and the consumer decision to buy•Distribution infrastructure
5
The Growth of Broadband Access
6
Broadband
7
Broadband: Where We Are
Residential Broadband Market: Competitive Landscape Quarter 1- 4
Subscribers (U.S.), 2007 - 2009
-
10,00020,00030,00040,000
50,00060,00070,00080,000
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Quarter and Year
Nu
mb
er
of
To
tal
Su
bs
cri
be
rs Total Satellite
Total FTTx
Total DSL
Total Cable
Source: Frost & Sullivan
8
Broadband: Where We’re Going
Broadband Growth Absent non-Market Influences
0
20000
40000
60000
80000
100000
120000
2007 2008 2009 2010 2011 2012 2013
Year
Su
bscri
bers
(000s)
Source: Stratecast
9
Broadband Stimulus
10
Broadband Stimulus
• Encourage the deployment of broadband infrastructure to ensure the ubiquity of broadband access.
• $7.3 Billion to encourage deployment of broadband to un served and under served areas -primarily rural areas beyond the reach of cable and DSL facilities
• Wireless access also encouraged
• August 14 (20th) deadline for funding proposals
• No Tier 1 carriers applied
NTIA
Department Of
AgricultureFCC
11
Breakdown of Broadband Stimulus
Funding ($ millions)
$3,900.00
$2,500.00$200.00$300.00
$400.00
Rural Loans andGrants
Broadband Grants(NTIA)
BroadbandMapping
Internet Usage
Upgrade PCCenters
Broadband Stimulus: $7.3 Billion
Source: Stratecast
12
Stimulus Impact
Stimulus Impact on Broadband Access
0
20000
40000
60000
80000
100000
120000
140000
2007 2008 2009 2010 2011 2012 2013
Year
Su
bscri
bers
(000s)
Range of impacts defined by NTIA comments and the stimulus objectives
60% of Subscribers
95% of Subscribers
Source: Stratecast
13
Stimulus: Does it Matter?
Market Growth Compared to Stimulus Influenced Growth
0
20000
40000
60000
80000
100000
120000
140000
2007 2008 2009 2010 2011 2012 2013
Year
Su
bscri
bers
(000s)
Market Min
Market Nominal
Market Max
Stimulus Min
Stimulus Nominal
Stimulus Max
Stimulus Max = 95%
Market Max = 91%Source: Stratecast
14
Net Neutrality
15
Net Neutrality
• Net neutrality is an emotionally charged issue
• Proponents want unrestrained access to the Internet
• Opponents want network operator opportunity to capitalize on infrastructure investment
• Truth is that net neutrality has been business as usual so far, but new applications tend to stress the network and compete with operators’service offerings
• Video
• VoIPhttp://news.squeak.org/category/editorials
http://isen.com/blog/2006/06/another-toon-for-net-neutrality.html
http://www.netcompetition.org/http://news.cnet.com/8301-13578_3-10122935-38.html?tag=mncol
16
Impact of Net Neutrality
Net Neutrality Impact on Broadband Access
0
20000
40000
60000
80000
100000
120000
2007 2008 2009 2010 2011 2012 2013
Year
Su
bs
cri
be
rs (
00
0s
)
Net Neutrality either has no impact on normal growth or it has asomewhat negative impact (both positions come with high uncertainty, though)
Source: Stratecast
17
Putting it Together
18
Net Neutrality and Stimulus
Net Neutrality and Stimulus Impact on Broadband Access
0
20000
40000
60000
80000
100000
120000
2007 2008 2009 2010 2011 2012 2013
Year
Su
bscri
bers
(000s)
All Impacts combined deliver accesslevels roughly equal to normal growth
Source: Stratecast
19
Implications for Carriers and Operators
20
Implications
• Net neutrality is almost certainly going to be part of the broadband landscape
• Stimulus funding, at the extremes, seems to be off setting the impact of net neutrality
• It appears that the market, minus any externalities, would do almost as well providing ubiquitous broadband access as the broadband stimulus funding combined with net neutrality
• If Tier 1 carriers are not accessing the stimulus funding, the implication is that those network operators that do, may not be deploying infrastructure in the most business optimal way: whathappens when the government subsidy is consumed?
21
Conclusions
22
Conclusions
• It is clear that both net neutrality and stimulus will continue to influence the broadband market for some time.
• Focusing on the service experience rather than the placement of infrastructure seems to be the best bet for network providers
• This allows networks to pay their own way
• Value perception generates margin
• To the extent that inefficient business models are encouraged bystimulus funding, there may be an opportunity for carriers and operators to acquire new subscribers through mergers and acquisitions in a few years
23
Next Steps
� Request a proposal for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. ([email protected])1-877-GoFrost (1-877-463-7678)
� Join us at our annual Growth, Innovation, and Leadership 2010: A Frost & Sullivan Global Congress on Corporate Growth, September 12-15 2010, San Jose, CA (www.gil-global.com)
� Register for the next Chairman’s Series on Growth: The CEO's Perspective on
Competitive Intelligence (November 3rd) (http://www.frost.com/growth)
� Subscribe for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
24
Your Feedback is Important to Us
Growth Forecasts?
Competitive Structure?
Emerging Trends?
Strategic Recommendations?
Other?
Please inform us by taking our survey.
What would you like to see from Frost & Sullivan?
25
For Additional Information
Jake Wengroff
Director of Corporate Communications
Information & Communication Technologies
(210) 247-3806
Mike Jude, Ph.D.Program Manager: Consumer Communications Services Stratecast | Frost & Sullivan(303) 466-2377 [email protected]
Angie Montoya
Global Analyst Briefing Coordinator
Marketing
(210) 247-2435
Craig Hays
Sales Manager
Information & Communication Technologies
(210) 247-2460