Need For Speed… How Real?

After years of being stuck in the slow lane, the US consumers are finally going to get a massive speed upgrade and taste the true broadband for the first time. From a 512 Kbps world to 6 Mbps, then 8 and soon 15 Mbps…. it seems the future has finally arrived. And with that, the question…. how much speed is enough? Can we the consumers really tell the difference between 15 and 30 Mbps? Or is it just a way for the broadband operators to get us to pay more… for something which we might use less.

To say that we are a nation starved of bandwidth would be an understatement. Generically speaking, The average US broadband experience is stuck somewhere between 500 Kbps to 3 Mbps. However, as we have been reporting in the recent months, things might be changing, as cable operators, and phone companies both roll out faster broadband connections.

BellSouth is now selling a 6 Mbps while Verizon is offering a $179 a month 30 Mbps plan. Comcast customers can now dream of between 6-and-8 Mbps speeds, while Cablevision has offered 50 Mbps service for an undisclosed amount of money.

The Wall Street Journal has a nice round-up of some of the speed upgrades. But what is behind the new found “speed thrills” philosophy of the incumbent carriers? One word: money. It costs the network operators a tiny bit more to offer more bandwidth, but they can sell higher speed connections for a premium price. Actually, the more speed you give to the consumers, the less they use the network. (Of course, no one can really tell if you are getting a real 3 or 6 or 10 megabit throughput. Support people at broadband providers have a standard line: its de innernet, what can I do?)

David Card, analyst with Jupiter Research points out that, “Time spent online isn’t shrinking, nor, in most cases, is the absolute number of users of any given function going down. It’s just that the breadth of activities any one user engages in is shrinking.” That perhaps can be explained by what Dave Burstein, publisher of DSL Prime wrote in an email to me …

Websurfing runs at only about a megabit per second, and nearly everything else except downloading is effectively throttled down at the source. Downloading turns out to have some natural limits as well; at 100 Mbps, you can download enough music for 24 hours of listening in only four minutes per day. The practical result, confirmed by high speed leaders like Masayoshi Son of Yahoo BB in Japan, is that the faster speeds yield only a extremely modest increase in real traffic demand.

As part of my daily reading, I read a fantastic essay by Shing Yin of Bernstein Research. Is Broadband Speed Like Money? Great line…. isn’t it?

….are we about to build ourselves into another bandwidth glut? Not in the backbone…but in the access network, where the Bells and cable MSOs are racing to roll out ever-faster broadband speeds? ….

Extending Shing’s methodology , I put together this little chart.

What this shows is that as we increase the speed, the real impact of the speed on what we do with it is marginal. Can your eyes tell the difference between a web-page loading in one second or 0.27 seconds. I guess not. If you can download a music file in 1.08 seconds, does that really mean you will be buying music all the time. No you perhaps will be buying better quality, and perhaps marginally more music. There is the other option, but its just easier to pay! Sure at 30 Mbps you can download DVD quality The Bourne Identity in 11 minutes, but its still going to take you 2 hours to watch it. These are analog questions in an increasingly digital world.

“Can a consumer tell any difference between 1.5 megabit per second and four megabit per second service?” asks Bruce Leichtman, president of Leichtman Research Group, Inc. “The answer is no.

So what the incumbnets are selling is a perception of speed that thrills. Don’t get me wrong…. I will upgrade, and hope the experience improves, but at some point, we need the applications that truly harness this speed come-along and are allowed to thrive. Not likely in the “we will control the net” attitude adopted by the incumbents. Even in truly immersive multiplayer games, its the latency, not the speed that matters.

The real bandwidth question is when are going to see an increase in the uplink speeds? Since the incumbents throttle the uplink speeds to barely usable, the broadband remains quasi one-way. P2P, the one true broadband technology is yet to blossom, especially in the legal realm.

Meanwhile perception is reality…. so more bandwidth.